In this example, I used the Highlight effect in the Text Effects pull-down menu. Although it is quite effective for creating blocks of color behind text, it just doesn't seem to look right to me.

This is what I want the highlights to look like. I just drew two rounded corner rectangles behind the text to essentially act as highlights.

The problem here is if there are text edits later or if I want to move the text block around, I have to make sure these highlights move with it. Not an easy task all the time. This is where Inline Graphics come in.

To make these highlights work better with text blocks, we'll paste them into the text block as an Inline Graphic.

Just select the highlight graphic and Cut it. Then with the Text tool, click just before the word you want to highlight. Then Paste in the copied graphic. You'll notice that the graphic pushes the text out of the way. This will be fixed later.

To ensure that the graphic stays with the text at all times (like when you edit it later or resize a text box), insert a non-breaking space between the graphic and the text. This is done by holding down Option (Alt) and typing a space.

Watch the animation above to see these steps in action.

Now we want the text to be sitting on top of the inline graphic. The graphic is automatically set to have text wrapping and there is no way to turn it off.

So the way to fix it is to first select the graphic with the text tool. You'll notice that there is now a new item in the Text Effects pulldown menu called Graphic element like shown above. In this pulldown menu choose Edit.

You'll now see the Run Around Selection dialog box like above. Depending on the width of the graphic you've placed, you enter a negative value in the Right attribute.

Just keep playing with values until you get something that works best for your particular graphic.

Now that you have the graphic sitting behind the text, you can also adjust things like the Baseline shift to get the text more centered in the middle of the graphic.

Above I added the highlight to the word "highlight" as well.

Also, because we added those non-breaking spaces, you can size the text block and the graphics will always stay with the text like shown above.

Since the run around is set to be so extreme, you may notice how difficult it will be to select the graphic again with the text tool. This can be made easier by using the Text Editor instead.

Choose the Text tool and while holding the Option (Alt) key, click on the text block you want to edit. You'll notice dark bullets within the text block like shown above. Those are actually where the inline graphics are located in the text. Just select the bullet and you can now edit the graphics' attributes again.