(See the best response by DarkCampainger.)
alert(M,"<font size=5>[SignReads]</font>","[SignTitle]")

Problem description:
When I try doing a text tag in an alert proc, the window pops up fine, but the output I get is
"<font size=5>blablabla</font>"

so basically the tags show up in the text instead of applying them. I'm not sure what to do.

I've also tried putting the tag where I define the [SignReads] variable, but I get the same thing.
Best response
Alerts and inputs do not support text styling. If you want something more fancy, you could create a window in your interface that you show/hide. You could use a label to display the sign's text, and a button to close the window. It wouldn't be too hard to set up a "general purpose" solution that you could reuse for different contexts.
Thankyou! Time to get learning about windows, uh, do you know a good place to get started?
In Dream Maker, you can press Help then scroll down to Skin Reference for information about interface.
The Making skins in BYOND 4.0 series of articles by Lummox JR would be a good start.
Kewl, now I have the window pop up, and the text is bigger so its easier to read!

But now I have another problem.
When the alert popped up, I could press enter to close it real fast. I made a button so u can click to close it, but u know, that takes a bit longer than pressing enter.
Well, wouldn't that assure that they would be more inclined to read it rather than just exit from it? Surely you don't want them to ignore what you are "alerting" them to.
Well, its a sign, you can read it by pressing up to make the text of it pop up. Alert is just a name of a certain box of text popping up.

My games an action kinda game, and it would slow the pace down cause most of the controls are done with the keyboard -- both hands included.

Think of it as like an actual game, you read a sign with a simple action, and you close it with a simple action.
Well then set a macro to close the window that becomes available when you open it.
How can I make a macro available when a new window pops up?

I can only use macros while I'm on the main window with the map on it.
You can assign the window to have a macro of its own. Double click your popup window in the Skin editor and go to the Options tab. Go to the dropdown menu labeled "Macro ID" and choose the macro you want to be active when that window is in focus.
Awesome! Thankyou so much albro!

Feels alot more like a game with the big text, and being able to close it fast! Much appreciated!