Showing typed text
Typing mode shows the words you type as one growing line, rather than naming the keys that made them.
Switch to it from the tray menu, from Mode on the Display tab, or with Ctrl+Alt+K.
What it is for
Reading your own typing. If the field you are typing into is small, or on a second monitor, or the application's font is not one you can read comfortably, this puts the same text somewhere you choose at a size you choose.
It is not the mode for a screencast. It says nothing about which keys produced the text, so a viewer sees what you wrote but not how — no shortcuts, no navigation, no corrections beyond their effect.
The line never wraps
The line is bounded to a window of characters that follows the cursor, and it never wraps onto a second line. Typed line length, on the Timing tab, is how much of it is shown at once.
An ellipsis at either end means the text continues that way. Those markers are worth having: text that simply stops reads as the application having lost it, where a leading ellipsis says the line is longer than the window — a different and true claim.

The window of text follows the cursor. The ellipsis on the left is the sentence continuing off the edge, not the end of what was captured.
Not wrapping is deliberate. The panel sizes itself to its content, so a long sentence would first widen the display to the edge of the screen and then grow it downwards a line at a time, ending up covering the thing being typed into.
Editing
Backspace and Delete remove characters, and the arrow keys, Home and End move the cursor, so the line follows what you are actually doing rather than being an append-only transcript. Ctrl with Backspace or Delete removes a word.
Pressing Enter, or switching to another window, starts a fresh line. There is nothing to be gained from carrying a sentence across a window change, and quite a lot to be lost — the old text would still be on screen while you typed somewhere else.
The caret
Show a blinking caret in typing mode is off.
The reason is that a blinking bar is right in a text field, where nothing else on screen is moving, and wrong on a transient overlay in the corner of the screen — where it is the only thing moving and keeps blinking long after the text has stopped changing.
Turn it on if you use the display to read your own typing and want to see where the insertion point is. With it off, text inserted mid-line gives no clue where the cursor sits.
What typing mode does not show
Modifier keys, function keys, and shortcuts do not appear: they produce no characters, so there is nothing for this mode to show. Mouse clicks are not shown either.
If you want both — the words and the keys — the honest answer is that this application shows one at a time, and Ctrl+Alt+K switches quickly.
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This manual is generated from docs/manual.