Hello and welcome @Rory_D 
The backticks are for preformatted text, so will display whatever is inside them with no extra formatting.
You can create a codeblock version that spans multiple lines using triple backticks instead:
Create a paperback book cover in a 1970s Japanese style.
It should be sci-fi and slightly otherworldly.
Though you may be looking for a blockquote style instead?
Create a paperback book cover in a 1970s Japanese style. It should be sci-fi and slightly otherworldly.
You can achieve that by highlighting the portion of text you want and using the quotemark button in your composer formatting bar, or by manually adding a > to the start of each new line you want to include in the quote block:
> Create a paperback book cover in a 1970s Japanese style. It should be sci-fi and slightly otherworldly.