You had it backward. Notepad only saves as TXT.
Notepad TXT file, or any TXT files, using whatever program, will only be the ASCII (which could also be Unicode - an extended set of ASCII made to provide for international language) characters.
In TXT files there is no font information (size, color, face, etc.), just the text. In TXT files there can be no image data. Again ... text text and more text.
Every word processing program, and a lot of other programs, as well, can read TXT files. But there will be no formatting maintained other than (possibly) line breaks and some indenting - if done so by tabs or space characters.
In Notepad you may notice a setting for selection the font, but all that does is change the appearance of your file while using the Notepad program. That selection does not reside in the TXT file itself.
Wordpad can be used to open, create and edit TXT files, in addition it can also handle Unicode fonts as well. PLUS Wordpad can be used to create, open, and save as RTF (Rich Text Format) files. RTF files can include font information and graphics. RTF files can also contain page setup information, such as the overall page size and orientation. RTF files are sort of the transportable file format for documents that can contain formatting that you want to maintain. RTF files be read by nearly every featured word processing program (Word, WordPerfect, etc.)
And to really make it sound confusing ...
Notepad can be "told" to open an RTF file. But doing so, you will not see an easily understandable file, UNLESS you are well versed in the language of RTF. RTF data is actually written in standard ACSII, but it is a language and can get quite involved, especially when "describing" (in ASCII) a graphic (not for the faint of heart).
So, why are there both Notepad and Wordpad programs given with Windows? Notepad is a quick, small, and text only file manipulator, whereas Wordpad is a bit larger, slower to open, but more feature rich.