In recent versions, Obsidian started to include the formatting when pasting with Ctrl-V, and use Ctrl-Shift-V for pasting raw text.
I think the feature is great. However, as I see in the forum, some users seem to be confused or annoyed because they do not expect this or want to paste raw text more frequently, and prefer to use Ctrl-V since that is simpler and already stored in “muscle memory”.
As a remedy, the option “Auto Convert HTML” has been introduced that allows such users to deactivate the formatted pasting.
However, this option now completely removes the ability to paste formatted. It is then not even possible to do it via the context menu (if switched off, the menu still has both entries, but they are then wrongly labeled and work the same, without formatting). (tested with 0.11.3)
My suggestion is to change the option so that it simply reverses the behavior of Ctrl-V and Ctrl-Shift-V instead of completly removing the feature. It don’t think it is that people don’t want to be able to paste formatted at all, they just don’t want to do it by default.