I feel like you're arguing in favor of fewer, really huge paragraphs, and you probably aren't. Hm.

Anyway, the logic as I understood it was more like:

Each change of speaker gets a new paragraph > Nonverbal speech (i.e. body language, gestures, throwing a punch, otherwise acting) is still speech > Each change of actor gets a new paragraph > Use as many as you need to tell a good story and no more.

The author does come off pretty confrontational in the article, but this is the disclaimer she includes in all her artist's notes:

DISCLAIMER: As with all advice, take what you can use and throw out the rest. As a multi-published author, I have been taught some fairly rigid rules on what is publishable and what is not. If my rather straight-laced (and occasionally snotty,) advice does not suit your creative style, by all means, IGNORE IT.

So there's that.

Really, it didn't make sense to me at first either, but it stuck with me, so I decided to give it a try. It turned out to be really helpful to me. For that reason, I'm recommending other people give it a try, that's all.

~Neshomeh

"No you're-" Phoebe bit down on the instinctive denial. "What happened?" she asked instead. "Who hit me? And why, I ask in all honesty, am I lying on a suitcase?"

The 'suitcase' in question bucked suddenly underneath her, tipping her to the stone flags of the corridor. "Oh," Phoebe managed to wheeze. "Sorry, Traveller. But really, what's going on?"

I am of the considered opinion that explicitly connecting Phoebe's second line to Traveler's action (there's a reason for the spelling dissonance, but the one-L version is technically-correct-and-never-used) is far more useful than splitting them out of some sense that new actor = new paragraph. It flows better, and it draws cause-effect relationships out better than the alternate version:

"No you're-" Phoebe bit down on the instinctive denial. "What happened?" she asked instead. "Who hit me? And why, I ask in all honesty, am I lying on a suitcase?"

The 'suitcase' in question bucked suddenly underneath her, tipping her to the stone flags of the corridor.

"Oh," Phoebe managed to wheeze. "Sorry, Traveller. But really, what's going on?"

And yeah, it also looks better on a screen - which, despite the curt dismissal of the issue in Nesh's link, is actually important to web-based stories (because no, I'm not going to resize my browser for every page I read; that's slightly ridiculous, and doesn't cover reading in something like MSWord).

hS

PS: On consideration, I think the key point here is to be aware that paragraph-breaks are just as much a decision to make as word-use. Be aware of how you're using them, and you can do it more effectively.

"Time is of the essence, sir!" The Bracket Fungus sensed an impulse to the elf's arm - a sword being drawn. "I'll cut this one down, you're needed at the front!"

Very true, the Fungus admitted. Join me when you are through. He moved forward, feeling the portal slip around him, and then...

Fire.

Heat.

Blazing light.

And nothing.

... which is the default effect of the <p> element—there is the option of using single line-breaks between paragraphs and indenting the first line. But you gotta do something, double breaks or indents. Exactly when to paragraph is debatable, but the fact that you have to somehow set off new paragraphs isn't.

~Neshomeh