You can categorize formatting in three different ways: by emotional effect, by visual effect, and by scope of application.
Formatting for effect
Emphasis or importance: Size, position, and color all direct your eye.
Parsability: You can take in only so much information in one eyeful.
Well-used formatting breaks a mass of unparsable information into eye-sized chunks.
Interest: Authors often use formatting to break the boredom of a flat presentation. The eye and brain respond to variation.
Cultural norms: Formatting is a major key to where the publication sits in the vast web of cultural relationships. This format-based social positioning is serious business