Fonts and formatting lost on compile to EPub and Mobi

Yes, by default, formatting will be cleaned up to avoid scenarios where half your book is slightly larger than the rest, because you changed your mind about writing fonts halfway through. It cannot and does not distinguish between that any intentional changes to font size you make. You can of course create section types for special sections (like the title page) and assign those to “as-is”, to avoid any adjustments made to it.

Disclaimer: the following doesn’t actually work yet. On the matter of the first letter though, there is a better and dedicated way of doing what you are describing, rather than simply boosting the font size of the first letter in the text editor, which is described in this post. There is an example project with some starter CSS to give you an idea of what can be done (much better than just making a huge letter that towers over the paragraph, you can make actual drop-caps).

Of particularly interest for the title page: that post also describes a style-based approach which I would recommend using over font size changes in the editor (particularly for the title page). While in theory that should work with the “Text and notes use editor formatting”, it doesn’t on account of bugs with that setting.