What markup is allowed in Wordpress.com?
Wordpress.com is different from a regular Wordpress site housed on a private server. Wordpress.com is actually a custom multiuser Wordpress implementation that shares server resources and databases across the thousands of Wordpress.com sites. Part of the benefits of this is near 100% uptime for your site no matter what kind of crazy traffic you suddenly start getting. Also, you can rest assured that you site will always be up to date with the latest Wordpress software and security.
For example, YouTube provides users with an "Embed" option for every video. This allows you to put the video on your own site. However, this embed code uses the iframe tag and so it is not allowed on Wordpress.com.
Wordpress.com knows that many users want to share YouTube videos and so they help you by providing several ways to sidestep the limitations. Check out this article in the Wordpress.com support pages for more about embedding YouTube video.
I already mentioned that iframes are not allowed, but there are many other HTML tags that are not allowed by Wordpress.com. Below is a list of some of the more popular tags that they do allow. I've included a brief description and a link to W3schools for each tag. W3schools is a great place to read more about HTML and even play with the code a little before trying it out on your own. Be sure to click the green "try it yourself" button to play around with the code.
address - works well as a footer provide contact information
a - allows you to make links to other webages
i - italic text
b - bold text
blockquote - indent a paragraph to indicate a quote
br - line break will stop the flow of text and start again on the next line and can also be used to add spaces between paragraphs
del - designate a part of text as having been deleted
ins - designate a part of text as having been inserted
div - apply text styles to a division of text
font - define font, size, and color
hr - create a horizontal line
img - insert an image that is already online somewhere
li - create a list
p - define text as a paragraph
q - add quotation marks to text
strike - shows text with a line through it
sub - create subtext
sup - create supertext
For a complete list of what code is allowed and not allowed on Wordpress.com visit http://en.support.wordpress.com/code/ .