Updates from RStudio support:
(1) “Thanks for reporting and I was able to reproduce this as well. I’ve filed a bug and we’ll take a look.”
(2) Taking a further look, this is actually a bug in the Markdown package and we’ve asked the maintainer (Jeffrey Horner) to look into it.

As juejung points out in a comment on my previous post, applying custom CSS to R Markdown by sourcing the custom rendering function breaks the rendering of inline equations.

I’ve opened an issue with RStudio support and will update here with their response. In the meantime, one solution to this problem is:

1. Do not create the files custom.css or style.R, as described yesterday
2. Instead, just put the custom CSS at the top of your R Markdown file using style tags, as shown below

<style type="text/css">
table {
   max-width: 95%;
   border: 1px solid #ccc;
}

th {
  background-color: #000000;
  color: #ffffff;
}

td {
  background-color: #dcdcdc;
}
</style>