It looks like your email settings might be set to be adding a <p> around text that you enter into an editable area.
There was a discussion about something similar here: Email Editor line spacing
Photo Credit: thanks, Joe Reitz
When you setup a template and inside the editable area there is only text (not a <p> or <div>) and this setting in admin is either "p" or "div", then Marketo will help you out by wrapping your text in that element (but only after you've edited that module). It sounds like turning that off should help out -- in the big picture, we also usually try to stay away from using the <p> element in email b/c it display differently depending on which system you're using to render it.
You'll probably want to have a peek at your Admin > Email > Edit Text Editor Settings and change the setting for email from <p> to either <div> or "none". Generally, we'll set this to "none" so that you aren't getting any unexpected "help" when you update the editable areas.
Ah that's exactly what it was, thanks so much! Changed the Text Editor settings to none and that helped prevent that extra spacing issue from happening.
Saved me so much time trying to figure that out haha. Appreciate it!