Input Format is another setting that is collapsed, click on the link to open it up.

If you are just typing plain text, you will never need to make any changes in this area, however, if you are using one of the "Rich Text" editors or typing in HTML code by hand, you will need to change this setting to Full HTML.

If you forget to change this, you will notice immediately, because all of your pretty formatting will be ignored and you will only see plain text. Don't worry, it is all still there, just being ignored. Go back to edit the new content and change this setting.