Thanks, I’d never run across that. I also wouldn’t have guessed it was the right thing since it mentions HTML
Right, it’s one of those things we just added because… well, why not, and like I say, this whole approach isn’t really meant to be the mainstream way of using Scrivener to write Markdown. So putting Markdown in the menu title would maybe confuse things a bit.
We could rethink that though. I have at times wondered why we don’t respect the HTML level setting in regular old Markdown output. Well, like I say, in most cases it is better to drive all of this from the binder anyway. Only at maybe H4+ could it be often argued as maybe the headings becoming more decorative than structural to the composition of the text, at a writer’s level anyway (what we need to know, when conceptualising the outline or the skeleton of the text).
I think I started down this route because it seems a waste to have an editor that supports styles and just use it like a plain text editor.
Oh yes, I totally agree with you, to the effect that using an expressive formatting capable text editor to compose Markdown is one of the things that makes Scrivener special. Not only do you have capabilities such as those described in this analysis of the style system in Scrivener, but just being able to use a rainbow of different highlighters while editing, or striking out text in a way that doesn’t insert markup—these are all extremely valuable capabilities that are difficult or impossible to find in text editors that must derive all visual presentation upon the disposition of the text (syntax highlighting).
But like I say, being able to do stuff like that doesn’t imply you have to give up on writing with Markdown. To instead not use it just as a plain-text editor (this would be what I referred to a third way of using Scrivener, but I doubt many do), but to find a sweet spot between plain-text and formatted text that helps us write more efficiently, and focus more of our time on creativity instead of problem solving the mechanics.
And that’s where I’ve struggled with making a template to help people get started. Where that sweet spot is going to sit is, I feel, very personal. You will find my personal line demonstrated in the user manual project. I use styles sometimes purely cosmetically, for no purpose other than to set the text in the editor. I often use Markdown, particularly for links, because I like to also use links as a writing tool, and Markdown gives me that choice of when to express a link to the reader as well, by putting brackets around it.
You put an official template in the software and extol its uses in a help file, and that makes a pretty strong statement on how the software should be used, when in reality one can indeed as you say, go all the way to using “Emphasis” to inject asterisks around text, if that pleases them more than typing it in, to the person that refuses to even use Scrivener’s footnote system because they prefer to have a human-friendly anchor naming setup rather than one that is serial number generated.
We know this, because we can look around the forums here and see people putting one single text file called “Scene” into a folder called “Chapter”, over and over, 25 times in their Draft folder, because that’s the example the Novel template gives. Therefore one should use the software that way, right? 
Never mind that is tantamount to putting one PDF or JPG into its own folder, hundreds of them, in your file system.
That’s what I want, it’s just that if I turn off the “Convert rich text to MultiMarkdown” option that’s not what I get; paragraph breaks ¶ get turned into single newlines ⏎ in the Markdown document. (Ulysses has a similar problem.)
Ah, I see what you mean. I’ve always double-spaced my lines, from decades of habit at this point (even prior to Markdown coming around, I wrote in LaTeX before that, and you double-space your paragraphs there too). If that’s not your habit, you might be interested in this tip. Speaking of LaTeX, those instructions are in fact for LaTeX writers using Scrivener, but never mind that, I’ve tuned all of the stock Markdown-based compile Formats to have these latent settings as well, all you have to do is switch them on.
Anyway, I think you’ll get along with the “hybrid” approach, as described above, and in Chapter 21’s introduction, if you are no stranger to using styles to declare textual meaning. That is the bread and butter of this approach.