Don't blame Amazon
There's is a real reason why Amazon put their digital foot down on bad formatting: It's a serious deal breaker for readers!
How long can you tolerate reading a book that has all the paragraphs running together? Or paragraphs with no indents or line space to signify there's a new paragraph? No author in their right mind would be so sloppy on purpose, but formatting issues happen more than you realize, or Amazon wouldn't have had to make such a public issue over the quality of the files they receive.
Let's assume you've been very attentive to your formatting, and it looks GREAT on your computer screen at home. Bad formatting happens when your file is translated into an epub (electronic publication) format for multiple devices. It happens when you HOPE Amazon's translation process from pdf to mobi keeps the majority of your formatting as you intended it.
But guess what? It's a computer program. It's not personal. When your file is rejected, they aren't dissing your story or content, or your stream-of-conscious writing style. They're saying the coding behind your text doesn't work. And the coding can be difficult to control in some writing programs.
Worse than being rejected by Amazon...is meeting their standards WITH bad formatting.
People don't often think about the actual formatting, but just imagine how your book will read if you lose all your italics. Readers (some) will assume you don't understand the basic writing rules and they'll be sure to complain in the reviews. (We all know how cruel reviewers can be.)
What if your chapters don't break where they're supposed to? It makes it very difficult for a reader to find their spot, or to jump back to find a certain scene. If pushing the forward or back button/icon takes you to the beginning or end of the book, instead of chapter heads, then it's a major pain. (It's also the price we pay for the convenience of digital. Have you noticed how hard it is to find your place once you lose it? Ugh.)
It's not that hard! You can do it!
Don't treat your finished novel like a submission for an agent/publisher. What's the standard layout for published novels in your genre? Open a book and get out a ruler! Look at lots of books. What do you see? EVERY book is different. Consistency is everything.
How? Use STYLES in Word instead of tool bar options. Don't use Tabs. Use 'space before' and 'space after' instead of line breaks. Fonts and font size matter. Chapter title positions matter. Headers and footers matter. Space between letters, words, and lines matter. Margins matter. Page numbers matter. Scene breaks matter. Basically...everything matters!
This is the stuff that few authors think about. Formatting is very deliberate. Nothing happens by accident. Consistency (in all these areas) is what allows your reader to be swept away by your story, rather than jarred by how your words are laid out.