Normally, Emacs knows when you are editing formatted text because it recognizes the special annotations used in the file that you visited. However, sometimes you must take special actions to convert file contents or turn on Enriched mode:
format-decode-buffer translates text in various
formats into Emacs's internal format. It asks you to specify the format
to translate from; however, normally you can type just <RET>, which
tells Emacs to guess the format.
If you wish to look at a text/enriched file in its raw form, as a
sequence of characters rather than as formatted text, use the M-x
find-file-literally command. This visits a file, like
find-file, but does not do format conversion. It also inhibits
character code conversion (see Coding Systems) and automatic
uncompression (see Compressed Files). To disable format conversion
but allow character code conversion and/or automatic uncompression if
format-find-file with suitable arguments.