This feature is supported in Adobe PDF, XHTML, and Microsoft XPS output.
For each output (i.e., PDF or XPS document) that needs to include redacted content, you can open the appropriate target. Then you can use the Advanced tab to specify how the content marked as "redacted" should be treated in the output.
How to set redacted text on targets
Why are there choices other than "black out"? Those options are available in case you need to generate another output that shows the redacted text.
example
Let's say you need to generate one PDF that blacks out the redacted text (e.g., the version being released to the public) and another PDF that shows the text rather than hiding it (e.g., the version being distributed to authorized individuals). In that case, you can open the target to be used for public release and set the redacted text option to "Black out." For the target to be used for authorized individuals, you can set the redacted text option to either "Highlight" or "Display as normal text."
to save your work.