Whatever text formatting (in-cell, not Conditional Formatting) that exists on cells in a Text column, which is a Display column, that is referenced through Lookup From Table columns is lost.
First I define a table “Tags” which has a Display Column that holds Text, and setup the text through the inline editor to have specific formatting (bold, color).
Note that this is not done through conditional formatting.
If I then create a separate table which has a column that uses Lookup From Table and references this “Tags” table, all linked entities have the text formatting removed:
As seen above the green text color along with the bolding of the text is stripped when “Complete” is displayed.
As the text formatting is a “cell value”, the formatting exists on the text in the cell, I expect that this would be directly copied for referenced cells and not stripped.