I found a 2019 thread about an issue between the two, which was resolved. Last night an attempted Paypal purchase was blocked for the first in many (very many) times. I read through the message from Paypal, which was not helpful.

As noted in our prior communication, PayPal suspended this payment for review to ensure it complies with the established User Agreement and our global regulatory obligations. During our review, we identified a risk that prevents us from completing this payment. We apologize for the inconvenience.

I dutifully clicked on "dispute resolution" and was tersely informed they don't do that for this.

So, what gives? Is this a thing again, or is it just me?

Could it be a problem with the card you have designated for use with Paypal.  Perhaps Paypal are not happy with it. There is no mention of SimMarket in the message you have quoted, or any general reference to a retailer.  I have always used Paypal for my transactions with SimMarket, including recent ones.  Of course, it's possible something has changed in the last few days.  There was a brief period a few years ago when SimMarket stopped accepting Paypal as a means of paying. I think that was a dispute about the charges Paypal makes for each transaction. The matter was resolved and everything went back to normal. 

I recall an old thread about one particular user who claimed to consistently have problems with SimMarket, but it seemed like it was specific to that user.  In this case it comes across as more like a Paypal issue. I suggest contacting them.

If they "identified a risk", they should at least explain what that risk is to the customer.

To be clear, it was not SimMarket that rejected anything (at least as far as I know) but PayPal. The only explanation was to refer me to their "standards," which reads like a EULA. I'm surprised no one else has run into this, apparently. I can just pay by credit card, of course, which is a bit clunkier, but still a lot easier than a trip to the Dollar Store for Fritos and Coke.

I had this issue months ago and used a different way for the payment (still with PayPal). Maybe it had something to do with your CC info.

FYI, I used PayPal with SimMarket Sat May 7 with no problems.

I ran into something similar a year or two ago trying to buy scenery for Tehran. I don't remember the exact wording, but the message was similar. I could not complete the purchase using PayPal, and the first credit card I entered directly also failed. I found out from the credit card company that the fact that the transaction description referenced Iran caused it to be flagged. (A second credit card went through just fine, however.)

Without starting a geopolitical discussion, it is possible that PayPal is trying to comply with various regulations about payments to foreign governments and blocking transactions because of key words. In my case the transaction had nothing to do with Iran (other than being a depiction of a location there), but it was enough to make an automated filter upset.