Blank lines are supposed to separate paragraphs. However, that seems to be restricted to "\n\n", no spaces allowed. For users editing a page, spaces in a blank line aren't very visible, so they might type in a few, resulting in a blank line like "\n \n", and it seems like that doesn't count as a blank line, although it is one visually.
For a demonstration, I've added a test page on a wiki I administer:
Please view the source and you'll see what I mean.
Looking at the HTML result, it seems like "\n \n" (one space) is simply left there, just isn't transformed to "<p>\n\n</p>" like I would have expected, while "\n \n" is removed entirely. I'm guessing that the latter involves the code for preformatted source text and that this becomes kind of a special case...
Either way, this is pretty non-intuitive for people who aren't terribly computer-literate, and I'd love to see this resolved.