I don't think that there is any idea of a "spelling bee" in German. For the most part, if you can say a word correctly, you can spell it.

For most words, yes. Exceptions are of course words from foreign languages. You may get little details wrong, like ä vs. e, s vs. ss. But in general, almost letters are spoken in Standard High German, and the mapping from spoken sounds to letters / letter combinations and vice versa is quite regular. https://en.wikipedia.org/wiki/German_orthography has more information. Stemming is important, see below.

Some dialects are quite far away from Standard High German, changing both grammar and how letters are spoken. A common joke for Saxonian dialects is "(some word) with a hard b", because "b" and "p" are both spoken as "b".

In 1996, ortography was reformed (see https://en.wikipedia.org/wiki/German_orthography_reform_of_1996), simplifying some cases, use of ß was reduced ("daß" was changed to "dass", "muß" to "muss"), and foreign words were changed to be written according to german rules (e.g. "Delfin" instead of "Delphin").

The reform caused a lot of public debate, many people thought (and still think) it oversimplified, and changes what previously was an error the official rule, while at the same time deprecating the old rules. One of my favorite examples is "aufwendig" (elaborate, costly, complex, opulent), spelled "aufwändig" according to the new rules. "ä" and "e" sound exactly the same here. And here is where stemming comes into play:

(1) "aufwendig" (spelled according to old rules) is the adjective derived from the verb "aufwenden" (to spend, to expend). From the same verb, you get the nouns "Aufwand" and "Aufwendung" (efford, cost, sometimes also overhead). Note that the noun "Aufwand" has nothing to do with "auf Wand" (on/onto (a) wall), it just uses the same letters in the same order, but in a single word. <Update>"Aufwand" is based on the past tense form of the verb, hence the "a" instead of "e".</Update>

(2) A very similar adjective is "wendig" (agile, maneuverable), derived from "wenden" (to turn). The noun derived from "wenden" is "Wende" (turn, turnaround). It may seem like that this is the stem of "aufwenden", as "auf-" is a common prefix meaning "on" or "onto", but to my understanding of my native language, this is wrong, just a coincidence. "on" or "onto" makes no sense in "aufwenden". Also, there is no turning involved in "aufwenden".

(3) A third adjective is "ebenerdig", composed of "eben" (flat) "Erde" (ground, the "e" is removed due to the suffix) and the suffix "-ig" (roughly meaning "like") to make a word an adjective. It literally means that something is on flat ground, especially absense of stairs and ramps.

Look at the old spelling: "aufwendig" - strip "-ig" and you get the stem of the verb "aufwenden". Note that the "e" from the verb stays. Compare with the new spelling: "aufwändig" - strip "-ig" and you get a false stem "aufwand" ("ä" usually stems from "a"). There is no verb "aufwand" in German, so that must still be a composed word, so you need to split into the commonly used prefix "auf-" and the stem "Wand". And now apply what you have learned in the previous three paragraphs: "auf-wänd-ig" must mean something onto-wall-like, something like something else placed onto a wall (think of wallpapers). And that is plain nonsense. But since 1996, that nonsense is official ortography taught in schools and used in all official texts.

Alexander