The digital paper plugin introduces a 'paper mode' in Obsidian, which disables delete functions such as backspace, delete key, and Ctrl+x. This mode encourages users to focus on getting ideas down without worrying about typos or erasing text, promoting a mindset akin to writing with pen on paper. The plugin helps to embrace imperfections during the drafting process, allowing for editing and refinement in subsequent passes. Users can toggle this feature on or off through the command palette, with an indicator displayed in the status bar when paper mode is active.