Emacs uses a number of heuristics to induce structure on buffer text. One of these heuristics is that, by default, a single space is not the end of a sentence, but is an abbreviation. This interpretation of periods prevents Emacs from wrapping text after periods with only a single space.

I don't put two spaces after my periods, and I like using word-wrapping. 

(setq sentence-end-double-space nil)

Reading through the variables documentation using the describe-variable help facility (C-h v sentence-end-double-space), we find other variables of interest:

Non-nil means a single space does not end a sentence.

This is relevant for filling.

Filling will be discussed tomorrow, and is known elsewhere as reflowing.