Note that the formatting of a web page should ideally not be done in the HTML, but rather on with CSS.
A HTML file (the source code) is a ASCII-text file, but you save it with extension ".html" (like "Test.html")---otherwise the computer would use a text editor and not a browser to open the file. You have to distinguish between the source code of the page, which is the text and all tags, and the displayed page, where the tags don't occur explicitely, only implicitely as formating. The displayed page can only be seen in your browser, but to write and manipulate the source code you should use some simple text editor (like "Notepad", for instance). However you may see the source code of every web page in your browser--- in the Internet Explorer click "View" and then "Source".
A HTML page is displayed as a collection of rectangular pieces, so-called HTML-elements. Each element consists of text enclosed by a pair of tags, or of a tag alone. In the first case, if tags come in pairs, both are labeled almost identically, except that the ending tag contains a slash, like in <H1>text</H1> or <P>text</P>.
Elements are block or inline-elements. Block elements take the whole available width, and further elements start underneath these elements. They may contain inline-elements or also some other block elements (note that elemenst can be nested. Inline-elements on the other hand just use the width necessary.
Erich Prisner, 2006