No, it’s not just you. It seems it is completely ignoring apostrophes and single quotes.
I just tried the “smartening” feature of a couple of different apps (BBEdit, Word, Nisus, the OS’ smart quotes): they try to convert single quotes and apostrophes, but they all get it wrong:
The second part of the last sentence is indeed tricky.
However, I got a correct result from the Pandoc converter:
To convert with Pandoc run this in the Terminal (or in a Shell Script KM action):
pbpaste | pandoc -t plain --smart | pbcopy
It converts the clipboard content and pastes it back to the clipboard. (You have to install Pandoc, for example via Homebrew.)
PS/Edit:
Add the --wrap=preserve switch to the Pandoc command, to prevent it from hard-wrapping the lines:
pbpaste | pandoc -t plain --smart --wrap=preserve | pbcopy