I follow a Paleo diet to lose weight. I get the basic body function to lose weight via reducing carbs, keeping insulin levels under control and allowing fat cells to release fat. I am a little confused over the mechanism to get fat in the first place though. I believe it's to do with liver function and lipogenesis, essentially turning carbs into fat which accumulates in the body. So to my question: why do these fats accumulate, while dietary good fats abundant in paleo lifestyle don't?
Eating excessive amounts of carbs cause your insulin levels to spike, which signals your body to store as much fat as it can - including the carbs that you eat. You are therefore never really burning your fat stores when you eat a high carb diet.
High levels of carbs, especially processed ones adversely affect your body in a wide range of other ways - mostly hormonal, and all detrimental to weight loss.
If you want to understand more in depth I would highly recommend reading Gary Taubes' book 'Why we get fat' and another by Maria Emmerich called 'Secrets to a healthy metabolism' - they both cemented for me the correct way to eat for health and weight loss.
I can describe my own experience of losing weight and keeping insulin/blood sugar under control.
If you eat more fat than you use (a) for structural purposes (e.g. building cell walls) and (b) for energy, then the excess will almost certainly be stored as fat.
Unlike carbs, the dietary good fats don't push up insulin, so they are a safer source of energy for me than carbs.
Excess protein will be converted into glucose and stored as glycogen and, when the glycogen stores are full, as fat.
So, even good dietary fats and protein will make me fat if I eat too much of them. The way I know if I am getting too much dietary fat is that I stop losing weight, even though carbs are low and protein is moderate.
I understand the question of fatty liver is quite complex and involves other things, like polyunsaturated fatty acids and fructose, as well as excess glucose.