When I was in elementary school, I learned about paragraphs through nonfiction writing. We learned that a paragraph had a topic sentence, supporting details and a conclusion. I don't remember how or if I learned about using paragraphs in fiction, other than the rule that a new speaker means a new paragraph.
When I became a teacher and started working with the Lucy Culkins writing curriculum (which I've mentioned here before), I learned some good basic rules for paragraph breaks in narrative, rules I was probably following without even realizing it. When there is a change in time, place or speaker, or when a new character enters the scene, you generally start a new paragraph.
Of course, since narratives are about people, and people don't follow rules very well, the rules can only get you so far. On my last round of revisions for SPARROW'S SECRET HEART, I found myself obsessing over the impact of paragraph breaks, the way that white space at the end of one line and the beginning of the next affected the rhythm and pacing of a scene and changed the emotional focus. I realized paragraph breaks are a way to create beats.
Just as a book is made of chapters and chapters are made of scenes, scenes are made of beats. "Beat" is a term I first learned in theater. According to Wordreference.com, a "beat" is "the smallest unit of action in a scene. ... It involves a shift in the action, thought, or emotion of the actor." (I invite my theater and acting friends to chime in here with better, more nuanced or experience-driven explanations).
Are you on a late revision round and running into a moment that's just not working? Maybe it's time to look at the beats and the paragraph breaks. Within the rules, there's some wiggle room that just might make the difference.