You are right about README files, so I'll tell you about README.md
README.md or .mkdn or .markdown denotes that the file is formatted in markdown format. Markdown is a markup language, it permits you to write using an easy-to-read, easy-to-write plain text format, then, convert it to structurally valid XHTML (or HTML). Thus, 'Markdown' is 2 things:
(1) a plain-text data formatting syntax; and
(2) a software tool, written in Perl, that converts the plain text data formatting to HTML.” With it, you can easily display headers or have italic words, or bold or almost anything that can be done to the text.