You copy a couple of paragraphs out of a PDF, a plain-text email, or a mailing-list archive from 2003, and what lands in your document looks like this:
The committee met on Tuesday to review the proposal. After a long
discussion about the second appendix, the chair asked for a
revised draft to be circulated before the end of the month.
Every line ends with a real newline character, hard-wrapped to some column that made sense on the machine it was written on. Resize your window and the text does not reflow, because there is nothing to reflow — those breaks are in the file. Paste it into anything that reflows text and you get a ragged column with breaks in the wrong places.
This is called hard wrapping, and undoing it is fiddly precisely because you cannot just delete every newline. Some of them are real paragraph breaks. Some belong to a bulleted list. Some belong to a code block or a terminal session where the line breaks are the whole point.
The Terminal way
fmt will re-wrap a paragraph:
fmt -w 10000 input.txt
Setting an absurd width collapses each paragraph onto one line. It is a blunt instrument: fmt has a rough idea of paragraph boundaries but no idea that lines 14 to 19 were a bulleted list, or that the indented block underneath was a shell session. Those get flattened along with the prose.
The KlarText way
Copy the text, then paste it with:
Edit ▸ Paste and Reflow (⇧⌘V)
Wrapped prose lines are rejoined into flowing paragraphs. Blank lines are respected as paragraph boundaries. Lists, code blocks and shell sessions are recognised and left intact, with their line breaks where the author put them.
It is a paste command, so it does its work on the way in — you never see the broken version in your document at all.
If the text is already in the document
Select the affected block and use Edit ▸ Join List as Prose if it is a list, or re-copy the block and paste it back over itself with ⇧⌘V.
For a whole file that arrived hard-wrapped, the fastest route is to select all, copy, and paste back with ⇧⌘V.
Going the other way
Sometimes you want hard wrapping — a commit message, a README, an email to a mailing list that expects 72 columns. That is Edit ▸ Wrap at Column. See how to wrap text at 80 columns on Mac.
A related shortcut
If the text is on your clipboard and does not belong in the document you have open, File ▸ New from Clipboard (⇧⌘N) opens it as a fresh document in one step, with no save dialog in the way.