First, quotes in nonfiction writing come in two types: direct and indirect. Direct quotations are used word for word from another source. For example if I copy the Preamble to the Constitution and use the quote in a nonfiction essay, book, or article, the information would be a direct quote. If I don't use the wording exactly, but paraphrase the Preamble, I have an indirect quote. In both cases I must give the source, the citation, but the display is completely different, differently formatted in my manuscript.
The length of a direct quotation determines its formatting. A quote about two lines long is incorporated into the paragraph where used. For example:
When discussing the keeping of secrets in war time, General Jackson told General Knox, “…but for God’s sake don’t communicate it to your best friends—her husband is a diminutively idle man, not in possession of a liver…" In other words, one shouldn't tell any one anything that is meant to be secret.
If the quote is longer than one or two sentences, then it needs to be formatted in a block: single spaced, indented from both sides, separated from the sentences before and after by a space. For example:
According to Beanery Online Literary Magazine, June 11, 2010, two types of quotations exist.
There are two types of quotations, direct and indirect. Direct quotations use the
exact language, either spoken or written, from a source outside of our own writing
or speech, and must rest between a set of quotation marks. Nothing of the quote can
be changed. Direct quotations are useful if the source material has particularly striking
or notable language.
However, when using a block format for longer quotations, quotation marks are not used. The block format informs readers the material is quoted.
An indirect quote is written into the sentences and/or paragraph where used, and quotation marks are not used. For example:
According the General Jackson, as he told General Knox, one shouldn't tell even a friend anything in wartime meant to be kept secret. (Note: source if know still needs to be used.)
Of course, quotes in fiction are dialogue and have their own formatting.