I don't think it has been documented. The general gist is, blank line
separates paragraphs. When a paragraph's lines all start with "-" or
"*" in the first character on each line, the line is formatted as a
list. When a paragraph's lines all start with leading spaces, the
paragraph is formatted "as-is" using an HTML <pre> style. This is
mostly useful for code samples.
The best way to experiment with the formatting is in an inline draft
comment. Type your text on a comment for a line of a file somewhere,
and save the draft, you will see how it is formatted. If you don't
like your comment, you can edit or discard it.