From off the web:
"Plain Text - A plain text message is an email message that does not include colors, fonts or formatting. It is the most basic type of email that is easily readable by all e-mail clients today. It does not support pictures displayed directly in the message body (although you can include them as attachments).
Rich Text - Outlook Rich Text Format (RTF) is a Microsoft format that only some e-mail programs understand, mainly the Microsoft Office Outlook clients. You can use RTF when sending messages within a company that uses Microsoft Exchange Server (i.e. OSU). RTF supports text formatting, including bullets, alignment, and links.
HTML Format – HTML supports text formatting, numbering, bullets, alignment, horizontal lines, pictures (including backgrounds), HTML styles, stationery, signatures, and linking to Web pages. This type of format provides the greatest range of formatting possibilities."