For the author: When your critiquer has used the Story formatting option in marking the excerpts from your story he or she has referred to, that text is pale. If the critiquer has given you a Classic (as opposed to Inline) critique, you can change both color and size of that text, and you can also choose to eliminate the story text altogether, leaving only the critiquer's words. This may be handy when your critiquer has referenced a lot of the original story in his or her Classic critique.
For the critiquer: Choose what text you want to quote in your critique and use copy/paste to move it from the story to your critique. When that's done, highlight the text and click Story snipped. You should now see tags around the text and when you preview your crit you can see that the quoted text is now pale grey.
You find Story snipped (purple circle around it) on the right side, next to bold.