Thanks for this thread!
I've also wondered the best formatting software to use. Since I haven't self-published since 2016, I wasn't sure if there are any new formatting programs out there or not.
I wanted to save up for Vellum but I never did. May be I'll just try all the free options and stick with what I like.
Honestly, the best formatting software is your word processor.
Modern word processors store documents as XML. Ebooks store documents as HTML. Since these two formats are almost identical, it's trivially easy to convert a manuscript that uses styles to the HTML/CSS that ebooks use to display text.
Since ebooks are HTML, like websites, you don't need to worry about formatting text margins, and all the accoutrements like drop caps, chapter headings, and page breaks are very simple to make with a word processor's style formatting.