There are three default types of formatting for your entry fields “none”, “xhtml”, and “<br />“:

- none: Just what it says: nothing is done, no HTML is inserted automatically

- <br />: Simply put, each carriage return in your input (i.e. each time you hit the Enter key) is replaced by an HTML <br /> line break tag.  That means, if you put a bunch of custom HTML in your code—say a <table>—then you may get unexpected output when the carriage returns are converted into HTML line breaks

- xhtml: Like the above, single carriage returns are converted into HTML line breaks.  It goes further though, and also wraps paragraphs (when they are separated by two carriage returns) in <p></p> tags.  In addition, it replaces some characters such as quotes by more typographically correct “curly quotes” as well as en-dash, em-dash, ellipsis, and the ampersand character. 

In addition to these three default settings, it is also possible to specify other formatting types through Admin > Custom Weblog Fields and specifying that a particular Plugin be used to provide the formatting.