This is a bug report for the WP-Markdown project, originally reported here:
https://wordpress.org/support/topic/newlines-not-recognized-when-preserving-significant-white-space/
Input:
<p>p1 l1 <em>inside</em> p1 l1</p>
<p>p2 l1 <em>end</em>
p2 l2</p>
<p>p3 l1
<em>begin</em> p3 l2</p>
Expected:
<p>p1 l1 <em>inside</em> p1 l1</p><p>p2 l1 <em>end</em> p2 l2</p><p>p3 l1 <em>begin</em> p3 l2</p>
(white space surrounding the emphasis element in all cases)
Actual:
<p>p1 l1 <em>inside</em> p1 l1</p><p>p2 l1 <em>end</em>p2 l2</p><p>p3 l1<em>begin</em> p3 l2</p>
(white space contributed by newlines removed)