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The readme.txt file is an essential file when submitting plugins to the WordPress.org repository.
There is an excellent article on Smashing Magazine which highlights all the important things you need to know when creating a readme.txt file.
When you’re ready and want to preview how the file will look into the repository, you can use this tool.
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2 Responses
Took me a long time to find the README file. But, for those pondering writing them may I suggest that you focus on how to use the plugin in plain, non-coder, language. Those readme files are often obtuse and unhelpful. What is second nature to you is not the new user. Then, tell why the plugin is different from some other approaches so that one can easily understand why/why-not to use it.