In markdown, you can use newlines to do manual word wrapping (handy with M-q in emacs) and it does not consider them a new paragraph. Ie., Markdown considers double-newlines to be paragraph delimiters. See http://daringfireball.net/projects/markdown/syntax#p.
However, Confluence interprets single newlines into <br>s and markdown2confluence passes them right through, meaning that your paragraphs display in Confluence peppered with <br>s.
Instead, markdown2confluence It should strip out single newlines.