This is the industry standard for theatre and film manuscripts, because it helps the actors and the directors easily find their way around the page.
Specifically, manuscript format means that the name of the character speaking is capitalized and set five tabs in from the left, with the lines they are saying starting on the next line, justified to the left. When the next character speaks, skip a line between the last line of dialogue and the next character’s name.
If you need to include a note on how a line is supposed to be said, called an actor direction, put it in parentheses on a line of it’s own between the character’s name and the line to be spoken.
While most of a play consists of dialogue written in this way, there are also sometimes descriptions of physical action, called stage directions. Stage directions are put in parentheses and kept in the center of the page, about 3 Tabs in on both sides.
Scripts are always typed in Courier New font, 12pt size. This is because, with this format and that font, a page of the script will be almost exactly a minute of stage time, making it easy to tell how long your play will run.