RTF (Rich Text Format) and DOCX both go beyond plain text by supporting formatting, but the gap in what each one actually supports is bigger than the similar-sounding "formatted document" label suggests. RTF covers basic formatting broadly and simply; DOCX covers Word's full modern feature set, at the cost of needing more capable software to open properly.
RTF: basic formatting, extremely broad compatibility
RTF supports fundamental formatting — bold, italics, underlining, basic fonts, simple alignment, and similar essentials — and, critically, is readable by an unusually wide range of software, including many text editors and word processors that wouldn't necessarily open a DOCX file correctly. RTF was specifically designed as a cross-platform, cross-application format for exchanging formatted text without requiring both ends to have the exact same word processor.
DOCX: Word's complete modern feature set
DOCX supports everything RTF does, plus considerably more: advanced styles, tables, embedded images and objects, tracked changes and comments, headers and footers, complex layouts, and the full range of features modern Word actually offers. This is naturally the format for any document that needs those more advanced features — RTF simply has no way to represent a tracked change or a complex table the way DOCX does, since those capabilities don't exist in RTF's simpler specification at all.
Why RTF still gets used despite being more limited
RTF's advantage is precisely that limitation — because it only needs to represent basic formatting, it's simple enough that a very wide range of software, including some quite old or unusual word processors, can open and correctly display an RTF file. For content where only basic formatting is actually needed, and maximum compatibility with unknown or older software matters more than advanced features, RTF remains a genuinely sensible, deliberately modest choice.
What's lost converting DOCX down to RTF
Converting a DOCX file that uses more advanced features (complex tables, tracked changes, certain embedded objects) down to RTF will lose or simplify those elements, since RTF has no equivalent representation for a lot of what modern Word can do. This loss is invisible if the original document only used RTF-equivalent basic formatting to begin with, but real and sometimes surprising if the source document relied on features specific to modern Word's DOCX capabilities.
A practical way to decide
For a document using only basic formatting, destined for genuinely unpredictable or older software, or where maximum compatibility is the priority: RTF remains a sensible, simple choice. For anything using Word's more advanced features — tables, tracked changes, complex layouts, embedded objects — or where you know the recipient has modern Word or compatible software: DOCX is the natural fit, and converting it down to RTF would lose real capability for no compatibility benefit if the recipient can already open DOCX anyway.
Once a document — RTF or DOCX — is finished and ready to share as a fixed, non-editable file, Word to PDF handles that conversion directly, and TXT to PDF covers the simpler case when the source content never had much formatting to begin with.