It might be worth noting that Smashwords gives the author the choice of converting with spaces between paragraphs (no indent recommended) or no spaces between paragraphs (indent recommended). You're getting whichever the author chose.
I recently put three of my o.p. books up on SW, and as far as I can tell from spot-checking the conversion was excellent. They emphasize how important it is to follow the SW style guide assiduously to get good conversion results. I did, and that's what I got.
You're welcome to download
free samples of mine to see what the results look like to you.
Changes introduced in transmission to the other retailers may be a different matter.