Some of the compile Formats presume that when you insert an empty line into the editor, you are wanting to insert a break between sections of text (that for whatever reason are not signficantly different enough to justify breaking them apart as separate sections in the binder). A hashmark like that is a standard way of indicating that in manuscript format.
Double-spacing between every paragraph is very unorthodox in word processing. You would usually want to achieve a visual space via paragraph formatting, not whitespace characters. But if you really do want to double-space out of preference, you can modify the compile format to remove this presumption.
That said, I double-space my paragraphs—but I write in Markdown format, which is quite a bit more simplistic and straight-forward than the word processing stuff, I find. It all gets tossed when you compile anyway, so all that matters is how you type the text itself, and double-spacing is how you indicate paragraphs.