RE: Flashback formatting. Help?

#1
Couple things, but mostly, I advise not to use flashbacks:

1st: flashbacks are frowned upon because they disrupt the flow of reading, especially when they are only a few paragraphs in length. If the particular scene is that important, I'd much rather jump to that point in the past (with a label 'X' years ago). Otherwise, just show what happens in the order it happens in.

2nd: you switched character perspectives in that short segment. (That can confuse some people.)

RE: Flashback formatting. Help?

#2
Agreed that flashbacks in general aren't great - as a reader, I want to see what exciting things will happen next, rather than going over stuff that has already happened. However, I think your experiment #2 is very successful. It does a great job of integrating past events smoothly and naturally by having the character introduce those events as part of her thought process. It keeps the reader's attention while providing extra context, and it's interesting because we can see Anne's mental reactions to what happened and how she connects the past to what's happening in the present. It helps develop her character a bit in that it shows that she is observant enough to notice someone's change in behavior, but it also shows that she doesn't understand why Josh has changed.

On the other hand, when a flashback is denoted in text without being introduced through the character's POV, it feels like it's something unrelated to the character's thoughts but shown for the benefit of the reader from the author.

Anyway, I really enjoy your experiment #2. IMO it's better than #3 because the additional spaces make me feel like you're singling it out, but of course something like that is just personal preference. Good luck with your story, I hope this helps ^O^)/