One area that has changed is shortcodes, those little square bracket shortcuts like
[gallery]. In WP 2.5, those were processed before paragraphs were auto-created and quotes were curled. This lead to funky (and invalid) XHTML formatting for block-level shortcodes like the
[gallery] one. In 2.5.1, shortcodes are parsed “at 11″ — that is, after paragraphs are wrapped and quotes are curled. Additionally, a shortcode with a buffer line between surrounding content will not be paragraph wrapped.
That shortcode’s output would be untouched by WordPress — whatever the shortcode outputs is going to the browser. Note that if you’re a plugin developer and you want the output of your shortcode to be p-wrapped or have its quotes curled, you’ll have to call those functions yourself. At some point in the future we may add more options for shortcode calling, but for now, you’re on your own for formatting.
Be sure to check out the excellent documentation for this feature!