Ah, it looks like some of the CSS in that is causing Calibre to replace all of the spaces with non-breaking spaces. As such it just sees entire paragraphs as a single long word, when it does line wrapping it cant try to cut at white spaces. i.e.,
Code:
<p class="calibre18"><span class="calibre7">“Never imagined I’d be a babysitter,” I hear SNIPno idea I’m grooming the horse in the next stall.</span></p>
You can fix this by removing: white-space

re-wrap
From the styles, in specifically the divs that wrap each chapter.