Yep, this is the most common mistake I see people making who are new to markdown as well.
I have never noticed it implemented any other way in practice, so I’ve gotten used to it.
The topic linked above has a number of legitimate reasons not to consider line breaks as new paragraphs by default in general, so its worth a read.
If lists could be special without any major pitfalls I think it would better meet user expectations.
especially when the "treat line breaks as paragraphs option is used"
like
this.