I've been out of the loop for a while, but I think the colored/italic/bolded/whatever text is done in HTML. If you're familiar with that, you should get the hang of it super easily; but otherwise, it's basically the same as a BBcode tag, just with < and > instead of [ and ].
<i>text here</i> should become
text here in game, for instance.
You may need to edit the code (the default character limit for things like signs and level titles is fairly small), meaning you'll need to convert all non-alphanumeric characters to their HTML encoding equivalent (found
here. This is only necessary while code editing out of game, not while entering text normally in game). Hope this helps, and I apologize if any of this information is wrong or outdated. If a level mod or someone could fact check, I'd really appreciate it.