Click the Word Wrap button on the main toolbar, press F11 on the keyboard, or select Word Wrap in the Options Menu to toggle word wrapping on or off. When you turn it on, paragraphs that do not fit on a single line will span across multiple lines.
Word wrapping only affects how AceText displays the text of a clip. No line breaks are inserted into the text. If you resize AceText, all paragraphs are re-wrapped to fit the new width. When you paste the clip into another application, it is up to that application to apply its own word wrapping, or not. If you want to permanently limit the length of the lines in a clip, click on the Reformat Text button on the collection toolbar, and select the Limit Line Length item.
Turn on word wrapping when working with text documents. It makes paragraphs easy to read. Turn off word wrapping when working with source code or other line-based data.