Always use line breaks...it's incorrect formatting technically if you go by professional standards, but honestly...on the internet it makes everything nice and easy to read. Easy reading makes happy readers. Happy readers makes more views.
I think in the computer age, using a full line break instead of an indent is a better choice. I have perfect vision but I still prefer to do things this way! Besides, reformatting is so easy - just do what you want if you're not working for someone else.
It's as `saintartaud said. And yes you have to make the spacing adjustment yourself, but that's not difficult with a fully-featured word processor's search and replace feature. (Replace each paragraph mark with two paragraph marks, then copy-paste into the site's editing window, but don't save changes from your word processor. Search and replace can also search for formatting, which is how I re-add italics and so on for submission.)
Any work you submit professionally should not have spaces between paragraphs, but that's also an easy adjustment to make before printing.)
Ha! This is most certainly not professional- just something for the amusement of people who are tired of standard fantasy stories. I'm writing it on a bet. I just wanted to pick a style of formatting that would be easy to read and not intrusive or obnoxious.
When posting online, you should ideally have a line space between each paragraph. It tends to make reading onscreen much easier.
For manuscript purposes, it is unnecessary. I usually write work in standard manuscript formatting, i.e. 12 point Courier with double-line spacing. It's very easy to parse on-screen and saves me the effort of having to reformat for printing and/or submission.