Microsoft Word never had problems with inserting any formatting at any position in the text. It also has some visual style indicators via caret shape and size.
MSWord doesn't have formatting codes, at least not for simple text styles. Instead, each individual character has formatting attributes. So the word italics is not a single italicized region, it's 7 separately italicized characters, that just happen to be next to one another. It's a radically different model from HTML/markdown/WordPerfect markup.
Microsoft Word may never have problems inserting any formatting, but I have; when it comes to paragraph structure, indenting and such, I find it very hard to predict. For example, I'll look at sections of a document with basically the same structure, but in one place the spacing between a table and the paragraph that follows is much larger, and I have no idea why or how to make them the same.
The innovation is the visual indicator, the cursor tail. The rest is how WordPerfect worked 30 years ago.
It is horrifying to think how much the Microsoft Word approach has hobbled rich text editing for all those years, and continues to do so.