Markdown is a lightweight [markup language](http://en.wikipedia.org/wiki/Markup_language "Wikipedia Markup article").  
It is used across the entire Stack Exchange network for formatting. Markdown is used for: Questions, Answers, Wikis, Chat and Comments -- although not all features are enabled in all contexts.

**References:**

 - [Markdown help](http://stackapps.com/editing-help)
 - [How do I format my posts using Markdown or HTML?](http://stackapps.com/help/formatting)
 - [The Formatting Sandbox on Meta Stack Exchange](http://meta.stackexchange.com/questions/3122/formatting-sandbox) -- which you can use to test out Markdown formatting.
 - [Markdown questions on Meta Stack Exchange](http://meta.stackexchange.com/questions/tagged/markdown)
 - [MarkdownSharp](https://code.google.com/p/markdownsharp/) - Server-side source code
 - [PageDown](https://code.google.com/p/pagedown/) - Client-side source code

Note that some sites also support [tag:mathjax]. See [the Mathjax wiki for more information](http://meta.stackexchange.com/tags/mathjax/info).

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**Potential Gotchas:**

- [Code block is not properly formatted when placed immediately after a list item](http://meta.stackexchange.com/questions/3327/code-block-is-not-properly-formatted-when-placed-immediately-after-a-list-item)