Text objects contain some text, and share the same object type as Curves and Surfaces, as modern fonts are vectorial, made of curves.
Blender uses a "Font System" to manage mapping letter codes to objects representing them in 3D views. This font system has its own built-in font, but it can use external fonts too, including PostScript Type 1, OpenType and TrueType fonts. And moreover, it can use any objects existing in the current blend-file as letters.
Text objects allow you to create and render 2D or 3D text, with various advanced layout options, like justifying and frames. By default, letters are just flat filled surfaces, exactly like any closed 2D curve. But, just like Curves, you can extrude them. And texts can follow other curves.
You can convert Text, either to a curve, or directly to a mesh, with Alt-C in Object Mode.
A maximum of 50000 characters is allowed per text object; however, be forewarned that the more characters a single text object has, the slower the object will respond interactively.
When you switch between Object Mode and Edit Mode, the Font panel remains the same. This means that its settings can be applied equally in both modes, and this implies that you cannot apply them to just a part of the text. So font, size, and so on, are common to all letters in a Text object. There is just one exception: the Bold or Italic buttons control properties specific to each letter (this is a way to use up to four different fonts in a text).