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The screen is full of 2's or meaningless characters

The application was designed for earlier models of the Apple II.

Leave the application disk in the drive, press Open-Apple-Control-Esc, choose Alternate Display Mode from the Desk Accessories menu, and press Return. When you're finished using the application, choose the accessory again to restore the standard display.

You can't get a color display even though you're using a color monitor.

Either the monitor is set to monochrome/ black-and-white mode or you're using an NTSC color monitor with a text-based application and that's the display you're supposed to get. Unlike analog RGB color monitors, NTSC color monitors can't display text clearly in color mode so they switch automatically to monochrome mode for text-based applications.

Change the switch on your monitor to color mode if there is one. If you're using an NTSC monitor with a text-based application, you don't need to make any adjustments. You'll get a color display when you use graphics-based applications.

The 40-column display changes to an 80-column display and clears the screen when you press Control-Reset.

You had the Control Panel set to 80 columns, but the application was using a 40- column display. Pressing Reset put you back in 80 columns and cleared the screen.

It's not really a problem unless you pressed Reset by mistake.
Reset is in an unusual location to keep you from pressing it accidentally.