Before you say anything, yes, I do know that Italics and underlining aren't really punctuation. But I'm doing it as part of this "In-Depth" series I've started, not necessarily along with "punctuation". So . . . yeah.

NOTE: Underlining should only be used in a situation where you are handwriting. So if you are typing, always use italics. So there should be no underlining in your story (Unless it's just something like underlining at the top "Chapter 1" or whatever, that's fine)

1. Use italics (or underlining) for titles of books, films, plays, TV shows, periodicals, works of art, and ships.
N.B: The words "a", "an", or "the", written before a title, are italicized (or underlined) only when they are part of the title. Before the names of magazines and newspapers, they are not italicized (or underlined).
e.g. the New York Times
e.g. The History of the Americas

2. Use italics (or underlining) for words, letters, and figures referred to as such and for foreign words not yet adopted into English.
e.g. This is my abuela.

3. Use italics (or underlining) for emphasis in dialogue or description.
e.g. "This is an outrage!" Dan burst out, banging the table.
e.g. The whole wall looked like it had been covered—no, plastered—with ink.

4. It is acceptable to use italics to indicate a character's thoughts, as opposed to dialog; however, both are acceptable in literature.
e.g. Rarity frowned. That's the dumbest thing I've ever heard.
would be an acceptable alternative to:
Rarity frowned. "That's the dumbest thing I've ever heard," she thought.
N.B. It is acceptable to use either form when writing; however, the writer/author should be consistent with strictly staying with one form or the other.
N.B. If a word inside the italicized phrase needs to be emphasized, show it by un-italicizing the word(s).
e.g. Alright, I thought nervously. This day is not going according to plan.

5. Use italics when referring to something in the past; like a flashback or memory.
e.g. "I remember back when I was a little kid . . . "

It was a crisp morning in December, on the cusp of fall and winter. . . .

1638658
I learnededed!

I avoid these two like the plague when i write.

1638658 I already know dis

I learned something.
I will use it for emphasis and foreign words now.
Thanks a lot

1638697
You learnededed!

1638703

1638733
You're welcome. Sorry, no pic for you. Couldn't find one that fit.

1638765
Hahahahaha

1638765

You forget something.

4. It is acceptable to use italics to indicate a character's thoughts, as opposed to dialog.
e.g.:

Rarity frowned. That's the dumbest thing I've ever heard.

would be an acceptable alternative to:

Rarity frowned. "That's the dumbest thing I've ever heard," she thought.

Especially because the second example doesn't make the situation as clear as the first. In these cases, both versions are correct, but one is better. It's important to be consistent with sort of usage.

1639486
Thank you for that reminder! I can't believe I almost forgot about that one.

1639609
Associated with that, Darth Wedgius the Distinctly Non-Expert would like to raise one (hesitant) objection.

I recently did inner dialog, and I needed emphasis on one word in it. I'd like to think that this would be an exception to "So there should be no underlining in your story".

1642100
Give me the passage where you used it.

1642490

Wait. I froze, as a thought occurred to me -- yeah, I hate when that happens. That means I’m not expecting an ambush, and that means... Aw, hell no.

1642572
Aha.
In that case, the word in question would not be italicized.
I shall add that to my own list.

1643008

Aha.
In that case, the word in question would not be italicized.
I shall add that to my own list.

It's too late -- I already published. Can we change the rules of grammar instead?

Er, I mean, thanks.

1643279
You need a grammar permit to change the rules of grammar.
I don't have one and I don't have permission to sell them. Sorry.

1638658
When using italics for thoughts, do they need quotation marks too? My editor told me to use them because it's what the characters are saying, even if it's not out loud. But I've seen stories without them. So which is correct? Is it with, without, or is it optional?

6433752
As indicated in the lecture, if you italicize thoughts, you do not enclose them in quotation marks. Your editor is wrong. Why he/she/it is wrong is a somewhat complicated thing, so let me try to break it down for you.

You may use dialogue to represent thoughts, with the idea that the person is "talking" inside their head, but as Blagadross pointed out, it isn't as immediately obvious that that is what is going on. Because "said tags" are often "invisible" when reading, and get ignored or missed. A problem with using them is that readers are often presented information that doesn't make immediate sense. That a character is thinking a thing and other characters are not hearing it spoken out loud can be important to a scene, and the reader needs to as easily and elegantly as possible be made to understand that. Spoken and thought dialogue will tend to blur together too easily.

You can also treat all narration as thoughts, leaving dialogue strictly for actually spoken words. If you're writing in first-person, second-person, or third-person-limited, you will be focused on a Point Of View character. In First- and second-person, the narration is explicitly what that character thinking, while in third-person-limited, the external narrator is focused on the POV character closely enough that narration is generally implied to be what that character is thinking, seeing, and so on.

I woke up this morning to an irritating noise.

First-person perspective. The fact that the noise is irritating is clearly the thoughts of the character narrating. It would likely not be correct to try to enclose this in quotation marks. Indeed, you might be hard-pressed to separate the thoughts of the character out from the "narration" in a decently well-written first-person perspective story. I can do so with this one, but you may find yourself writing passages formed in this way where it becomes worse to separate them out.

I woke up this morning to a noise. Man, that's annoying.

Still in the first-person perspective, but now it is formed in such a way that the statement of the noise being annoying is a "direct thought" of the POV character. The question you'd have to answer yourself if you were writing these things, is something along the lines of how important is it to draw focus on the fact that the character is actually spending brain power on the annoying quality of the noise? You may decide the latter form is preferred to better fit your artistic style.

I woke up this morning to a noise. "Man, that's annoying," I thought to myself.

Also grammatically correct. Still in the first-person perspective. All three examples cover the exact same event, and all are grammatically correct. If you have any preference for one over the other two, that is part of your authorial voice and style choice. If there is something about your story, the character you're writing, or just generally your artistic vision that feels one of these is better, then go with that.

You wake up in the morning to an annoying sound.

Second-person perspective. Formed like the first example. Pretty much the world is telling "you" that the sound is annoying to you. I am really against writing in second-person, but some people are fans. Despite my distaste for the perspective, here is how it looks compared to the others.

Twilight Sparkle woke up one morning to an annoying sound.

Third-person-limited. The fact that the sound is annoying is again a value-judgment of the POV character, while the fact that they are waking up and there is a sound happening are objective facts presented by the narrator. Forming the event this way is rather compact, and it often isn't important in this perspective to emphasize the objective narration from the subjective POV stuff. This perspective is often preferred because of how elegant and intuitive it can be to write.

Twilight Sparkle woke up one morning to a sound. Man, that's annoying.

Still third-person-limited, but the value judgment of the sound by Twilight Sparkle is rendered more explicitly her thoughts, while the rest of the narration is more clearly third-person narration. Again, style choice would dictate which one is more right for you and your story.

The loud sound of jackhammers from a construction crew near the Friendship castle woke up Twilight Sparkle. "That sound is annoying," she thought to herself.

Third-person-omniscient. The narrative is sticking strictly to objective facts that are happening, without relying on subjective value statements, because those are somewhat impossible to make in this perspective. You also cannot treat narration as the thoughts of any POV character, because this perspective technically doesn't have one. As such, you would need to present internal thoughts in some way that is fairly objective and linked to a particular character in a clear way, at which point treating them as dialogue becomes the superior choice.

So, your editor is wrong. Not because it is wrong to enclose "thoughts" in quotation marks, or that it is wrong to treat them as if spoken but inside voice instead of outside voice. Because that is a way people think, and it is an easily understood way to present thoughts of a character to your readers. But not all thoughts are "spoken" inside the head. Some things are "observations" and don't have fully formed thoughts associated with them.

"That timberwolf is scary and running towards me! I should run away from it or it will hurt me!"

This is possibly much more coherent a set of thoughts than some characters would ever have in that situation. Some characters might think out fully formed sentences in that situation. But there isn't a grammar rule that says you're forced to always treat them that way.