In 2005, Elizabeth Kostova had success with her vampire novel, The Historian, a book in which the past/backstory was in set in italics. How often do literary agents see manuscripts so formatted, and do you get any gut feelings, presentiments, or intuitions when you do?
Often enough, and it makes me nuts.
The book you read with the italics was published. It was NOT the manuscript form.
The industry standard for manuscripts is TNR or Courier 12pt. No italics. No using different fonts for inner thoughts, IM texts, or notes passed under the table.
If you need to set off chunks of the manuscript as backstory you mark it with a date that clearly distinguishes it from the present day narrative. Example:
Felix Buttonweazer's teddy bear had seen better days.
Italic is suitable ONLY for small bits of texts: inner thoughts, IM texts or notes passed under the table.
And don't underline in place of italics.
The ONLY exception to this is if you are sending a manuscript to a place that has different, specific guidelines. You will be able to identify those places because they will have something called Submission Guideline and it will say "send all manuscripts in Comic San Serif" and you will do that.