When using the 3rd-party SwiftKey keyboard with Drafts (which I do as much as possible), to create MD checklists (including a built-in Drafts keyboard row tool to auto-complete a ‘- ’ to create the first checkbox), the second line of text inserts an extra space in front, and capitalises the first letter of each word. It seems to insert a space in front of the second line because when the first line has been finished and I’ve pressed Return for a new line, SK’s autocorrect can’t tell that there’s any space between where the cursor is now and the end of the first line so it wants to offer spelling or predictive text options for that word. I know that this might be a SwiftKey issue but it doesn’t show up in other apps where I can write in MD but admittedly they all handle it in slightly different ways. So I wondered if @agiletortoise or anyone else in the community has experienced something like this or has any ideas.
That’s the keyboard I use all the time too and it works fine for me.
I am not aware of any settings for the keyboard that could cause this.
Does the default Apple keyboard work okay for you in Drafts or does that also give the same result?
The Apple Keyboard works fine, no issues. It looks to me from your screenshot like you get the capitalisation (my screenshot is inaccurate because the behaviour is the same as yours, that the first word DOESN’T get capitalized), but you’re not getting the extra space that results from SwiftKey thinking it needs to be ‘separated’ from the end of the word that occurs at the end of the first line. It just quite bugs me is all! 
I tried to troubleshoot this a little. I was only able to reproduce what you described once or twice. It doesn’t seem consistent, and definitely has something to with their auto-correct trigger – but I don’t think there’s anything I can do about it.
Can’t really say if it’s a SwiftKey bug or a problem with Apple’s keyboard APIs, which have a bit of a history of inconsistent behaviors…but the host app does not have any visibility into what’s going on with the keyboard, or even anyway to know if a third party keyboard is being used, so couldn’t really workaround event if I wanted to. 
No worries, I appreciate you trying to look into it @agiletortoise!