Model space is where you draw your object, at full scale. Paper space is for your sheet layout. Typically, your title block and border, all notes and miscellaneous text go here. Now comes the hard part. Some CAD users also place all their dimensions in paper space as well. On the other hand, many CAD users still dimension in model space. I suppose it is a matter of how you learned AutoCAD and/or who your teacher was.
Those of us who remember and used AutoCAD when there was no such thing as paper space may be a little reluctant to make the switch. There are pros and cons to each viewpoint so the choice is either up to you or the company you are working for.
One advantage to paper space is that the CAD user can have multiple drawings on a sheet and they all can have a different scale. Another advantage is that when it comes time to plot this sheet, the scale is 1:1. What could be easier?
Caveat: this is just one user's opinion. Others are free to offer their own point of view.