How to render html in select2 options

Ok, played with this for a while and found a working solution so I'll answer my own question here.

The key here for me is to build a data array with content for both templateSelection and templateResult. The latter renders fine in the dropdown but any multiline content will not be contained in the select2 element so needs to be displayed inline (or at least on a single line). Defining escapeMarkup as an option allows overriding of the core function which would normally strip out html content.

It's also important to define the title attribute since otherwise you'll end up with html tags in the tooltip.

var data = [{
  id: 0,
  text: '<div style="color:green">enhancement</div>',
  html: '<div style="color:green">enhancement</div><div><b>Select2</b> supports custom themes using the theme option so you can style Select2 to match the rest of your application.</div>',
  title: 'enchancement'
}, {
  id: 1,
  text: '<div style="color:red">bug</div>',
  html: '<div style="color:red">bug</div><div><small>This is some small text on a new line</small></div>',
  title: 'bug'
}];

$("select").select2({
  data: data,
  escapeMarkup: function(markup) {
    return markup;
  },
  templateResult: function(data) {
    return data.html;
  },
  templateSelection: function(data) {
    return data.text;
  }
})
<script src="https://ajax.googleapis.com/ajax/libs/jquery/1.8.3/jquery.min.js"></script>
<link href="https://cdnjs.cloudflare.com/ajax/libs/select2/4.0.2/css/select2.min.css" rel="stylesheet" />
<script src="https://cdnjs.cloudflare.com/ajax/libs/select2/4.0.2/js/select2.min.js"></script>

<select></select>

Alternately, with a couple small CSS tweaks you can allow the full html option content to display inside of the select container without the need for the template callbacks:

var data = [{
  id: 0,
  text: '<div style="font-size: 1.2em; color:green">enhancement</div><div><b>Select2</b> supports custom themes using the theme option so you can style Select2 to match the rest of your application.</div>',
  title: 'enchancement'
}, {
  id: 1,
  text: '<div style="color:red">bug</div><div><small>This is some small text on a new line</small></div>',
  title: 'bug'
}];

$("select").select2({
  data: data,
  escapeMarkup: function(markup) {
    return markup;
  }
})
.select2-container .select2-selection--single {
  height: auto!important;
  padding: 5px 0;
}
.select2-container--default .select2-selection--single .select2-selection__rendered {
  line-height: normal!important;
}
.select2-container .select2-selection--single .select2-selection__rendered {
  white-space: normal!important;
}
<script src="https://ajax.googleapis.com/ajax/libs/jquery/1.8.3/jquery.min.js"></script>
<link href="https://cdnjs.cloudflare.com/ajax/libs/select2/4.0.2/css/select2.min.css" rel="stylesheet" />
<script src="https://cdnjs.cloudflare.com/ajax/libs/select2/4.0.2/js/select2.min.js"></script>

<select style="width: 100%"></select>

If I am not mistaken you can only render HTML if you set the templateResult and templateSelection options and have them return a jQuery object.

var data = [
      { id: 0, text: '<div style="color:green">enhancement</div>' },
      { id: 1, text: '<div style="color:red">bug</div><div><small>This is some small text on a new line</small></div>' }];

    $("select").select2({
      data: data,
      templateResult: function (d) { return $(d.text); },
      templateSelection: function (d) { return $(d.text); },
      
    })
    <script src="https://ajax.googleapis.com/ajax/libs/jquery/1.8.3/jquery.min.js"></script>
    <link href="https://cdnjs.cloudflare.com/ajax/libs/select2/4.0.2/css/select2.min.css" rel="stylesheet" />
    <script src="https://cdnjs.cloudflare.com/ajax/libs/select2/4.0.2/js/select2.min.js"></script>

    <select></select>