Yes, it can print on envelopes and non-standard size paper. I use this option all the time to printer address labels.
Just above the paper tray, there is a little flap that opens to reveal a slot for envelopes and labels. You adjust the sliders to accommodate the envelope, insert the envelope into the slot, set your software to print correctly on the envelope, and then choose the 'Manual Feed' option in your print dialog box. That's it.