A text image is useful when plain text cannot be pasted: a quote for a slide, a snippet that should not be copied by mistake, a caption for a social post, or a message that must look the same on every device. Rendering it as a PNG fixes the layout and the fonts.
The tool lays out the text at the width you choose and wraps on word boundaries. Very long words, links and unspaced Chinese or Japanese text break at the character level. The preview updates as you type, so the downloaded PNG matches what you see.
Fonts are the system fonts on your device: Sans, Serif and Mono map to the typefaces available there. A PNG made on one computer may use a slightly different face than one made on another, so check the result on the device where people will view it.