T.J. Crowder's answer is correct. I've gone a little further code-wise: here's a fully-formed example that works in all major browsers. I've posted variations of this code on Stack Overflow before (here and here, for example), and made it nice and generic so I (or anyone else) don't have to change it much to reuse it.
jsFiddle example: http://jsfiddle.net/7Vf5J/38/
Code:
// Reusable generic function
function surroundInElement(el, regex, surrounderCreateFunc) {
// script and style elements are left alone
if (!/^(script|style)$/.test(el.tagName)) {
var child = el.lastChild;
while (child) {
if (child.nodeType == 1) {
surroundInElement(child, regex, surrounderCreateFunc);
} else if (child.nodeType == 3) {
surroundMatchingText(child, regex, surrounderCreateFunc);
}
child = child.previousSibling;
}
}
}
// Reusable generic function
function surroundMatchingText(textNode, regex, surrounderCreateFunc) {
var parent = textNode.parentNode;
var result, surroundingNode, matchedTextNode, matchLength, matchedText;
while ( textNode && (result = regex.exec(textNode.data)) ) {
matchedTextNode = textNode.splitText(result.index);
matchedText = result[0];
matchLength = matchedText.length;
textNode = (matchedTextNode.length > matchLength) ?
matchedTextNode.splitText(matchLength) : null;
// Ensure searching starts at the beginning of the text node
regex.lastIndex = 0;
surroundingNode = surrounderCreateFunc(matchedTextNode.cloneNode(true));
parent.insertBefore(surroundingNode, matchedTextNode);
parent.removeChild(matchedTextNode);
}
}
// This function does the surrounding for every matched piece of text
// and can be customized to do what you like
function createSpan(matchedTextNode) {
var el = document.createElement("span");
el.style.color = "red";
el.appendChild(matchedTextNode);
return el;
}
// The main function
function wrapWords(container, words) {
// Replace the words one at a time to ensure "test2" gets matched
for (var i = 0, len = words.length; i < len; ++i) {
surroundInElement(container, new RegExp(words[i]), createSpan);
}
}
wrapWords(document.getElementById("container"), ["test2", "test"]);