Hi Ken,
Yes, I am able to reproduce it in your demo too. Below are the steps to reproduce it :
1. Add some lines of text in the editor.
2. select first line text.
3. select any option from Normal dropdown i.e. Heading 1 or Heading 2 .................
4. Expected, it should apply the format to the selected text only but actual it is formating all the text in the editor.
Please let me know if you need furthere information.
Thanks,
Sanjay