How do I italicize words in the title? The title field does not have a formatting panel under it like the body field.
There is no way within EE to italicise elements within a title string.
If you want the ability to add arbitrary rich text formatting to the string you are using for a title the only way to do this within EE is to use a different field to hold the title text you want to use (either a text input field set to accept Markdown formatting, or a Rich Text field).
To make it less confusing for editors, you can rearrange the CP fields and screens for that channel to put your alternative title field close to the actual title field.