Hi Melissa,
Thanks for posting in the community. We are happy to help you.
Based on my test, it seems that I can't reproduce the same situation in the Text web part. I have recorded a video about the situation on my side. Also, the following screenshot is the situation when I published the page. If my understanding conflicts with your meaning, please point it out and provide a full screenshot for us to better understand.

If the Text web part still doesn't display the paragraph spacing on your side, please try to use another browser, like Edge, open the private window of the browser, go to the page, insert a new Text part, then check again. Also, you can try to input the content in a Word document, then copy and paste the content into the Text web part, then check again.
If the situation still happens, please ask your admin/IT department to go to Microsoft 365 Admin Center> Health> Service health to check if there are any related service incidents in your tenant. If so, please wait for the repair. If not, please create a support ticket via Microsoft 365 Admin Center> Support> New service request. That support team there will have the correct channel and resources to help you investigate more and find what exactly the reason has caused this situation.
We look forward to your response. Thanks for your cooperation.
Sincerely,
George | Microsoft Community Moderator