To install in Sublime Text 3, you'll need to extract the py file from the default package before patching it.
Here are short instructions to do it in Linux. First change to the directory that you have sublime text, unzip the file, and patch it:
cd /opt/sublime_text unzip Packages/Default.sublime-package paragraph.py -d ~/.config/sublime-text-3/Packages/default curl https://gist.githubusercontent.com/SmileyChris/4340807/raw/paragraph.diff | patch ~/.config/sublime-text-3/Packages/default/paragraph.py
Or if you've downloaded the diff, you can just patch it from that rather than `curl`ing:
patch ~/.config/sublime-text-3/Packages/default/paragraph.py < paragraph.diff