How do you keep the text confined to a certain space. Kind of like a display.newRect for display.newText so that way the text doesn't run off the screen if it's too long?

There is indeed :)

Try out display.newRetinaText, that has the option to set how wide and high it can go. For example..

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display.newRetinaText( string, left, top, [width, height,] font, size )
 
display.newRetinaText( "Hello", 0, 0, 280, 220, "Helvetica", 16 )