Rich Text Editor is a WYSIWYG editor: click a toolbar button and see the formatting applied directly, headings, bold, italic, lists, and more, without writing any markdown or HTML yourself.
Both a rich (formatted) version and a plain-text version at once. Pasting into something that supports rich text (an email, a document editor) keeps your formatting; pasting into plain text fields falls back to the plain-text version automatically.
Headings, bold, italic, underline, strikethrough, ordered and bullet lists, blockquotes, and links. It's intentionally focused rather than a full word processor.
Yes. Before anything is copied or downloaded, the HTML is passed through a sanitizer that strips anything beyond the tags this editor's own toolbar can produce, so pasted or typed content can't carry along unexpected scripts or markup.
No. Writing, formatting, and exporting all happen locally in your browser. Nothing you type is sent to a server.