$FormatType gives the default format type to use for text that appears in graphics.
The default setting for the standard notebook front end is $FormatType = StandardForm.
The default setting for the text-based front end is $FormatType = OutputForm.
A common alternative setting is TraditionalForm.
Box-based format types such as StandardForm and TraditionalForm can be used only when a notebook front end is present.
$FormatType gives the default value for the FormatType option in graphics.
See The Mathematica Book: Section 2.9.15.
See also: $TextStyle, FormatType.
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