Don't understand the documentation for changing html output

<p>
   Text here blah blah blah after a new line then a tab that I don't want...</p>
<ul>
   <li>
      list item 1 after a new line and two tabs...</li>
   <li>
      list item 2, same thing...</li>
</ul>

<p>Text here blah blah blah inline...though I do want a new line for each paragraph</p>
<ul>
   <li>list item 1 all on one line</li>
   <li>list item 2 all on one (new) line</li>
</ul>