In my not so humble opinion, I think it is a mistake to have "retain line breaks in paragraphs" by on by default.

Some is just idiosyncratic as I personally was frustrated with how long it took me to discover that the option existed and where to turn it off. Also prior to discovering that this was a feature that could be turned off, I was going to file a bug report.

Not just about me

But this isn't just about me. It is perfectly fine to have defaults that extend whatever passes for "standard" Markdown. But it is a mistake to have a default that will break things (pun intended) that are written in standard markdown. So sure, have it as an option, but leave it as one that is off by default.

Consider yourself lectured on backwards compatibility, (pseudo-)standards compliance, etc.

A rant/lesson about line breaks in paragraphs

A useful practices developed years ago by the TeX community back in the olden days was to put a sentence on each line. This way when you made changes in a paragraph, the only diff was in the sentence that actually changed. We didn't have git or even CVS back then. We would actually email diffs to our co-authors. (We also walked two miles in the snow up hill to school -- both ways.) Now that we all use git with even more collaboration, this kind of thing is more important.

In coding a line is a meaningful unit for the human reader. This is why line-based revision control systems work. diff is based on lines for a reason. Now sure a paragraph is a meaningful unit in prose, but it is too large a one. You would wouldn't put

for (i=0; i <n; ++i) {
    some_statement;
    some_other_statement;
   if (condition) {
     something;
   }
   some more;
}

on a single line even though it is a meaningful unit. You break it up into the lines shown both for easy reading of the source and because you oven wish to make changes to individual lines. My argument is that a paragraph of prose is analogous to that chunk of code. And that individual sentences are analogous to what we consider a line of code.

Significant trailing whitespace? Yuck!

Probably my biggest gripe about Markdown is how one specifies hard line breaks. Trailing whitespace is not visible and so shouldn't be significant. So I do understand the appeal of turning this language feature sort of "off". But until there is a better way to specify a hard line break within a paragraph, we have to live with the mechanism we have.