That’s because there aren’t any paragraphs to respect. 
Markdown requires an empty line to indicate paragraphs—it makes a lot more sense when you consider it is designed to be used anywhere. Ever seen a plain-text file with no space between paragraphs? Yikes. So a bunch of adjacent lines in Markdown will be combined into one paragraph. This is because many plain-text files will be hard-wrapped (such as email source).
If you must for some reason use word processing style paragraphs instead, then the tips given in this thread should help. Even though this refers to the LaTeX template, I have made the same setup in all of the provided stock Markdown-based compile formats.