The conventional way of typesetting running text has no separation between paragraphs, and the first line of each paragraph in a block of text indented.
In contrast, one common convention for typewritten text was to have no indentation of paragraphs; such a style is often required for "brutalist" publications such as technical manuals, and in styles that hanker after typewritten manuscripts, such as officially-specified dissertation formats.
Anyone can see, after no more than a moment's thought, that if the paragraph indent is zero, the paragraphs must be separated by blank space: otherwise it is sometimes going to be impossible to see the breaks between paragraphs.
The simple-minded approach to zero paragraph indentation is thus:
\setlength{\parindent}{0pt}
\setlength{\parskip}{\baselineskip}
and in the very simplest text, it's a fine solution.
However, the non-zero \parskip interferes with lists and the like,
and the result looks pretty awful. The parskip package
patches things up to look reasonable; it's not perfect, but it deals
with most problems.
The Netherlands Users' Group's set of classes includes an article equivalent (artikel3) and a report equivalent (rapport3) whose design incorporates zero paragraph indent and non-zero paragraph skip.
This question on the Web: http://www.tex.ac.uk/cgi-bin/texfaq2html?label=parskip