The student does not need to understand the "paper method" of flight planning, weight and balance, or anything else. They need to understand the "process" as well as the need. They need to understand the reasons for making a flight plan and completing an accurate weight and balance, and the errors that can occur in whatever method they choose to utilize, and how to mitigate the risks inherent with that method. One method isn't better than the other, as both have pros and cons. Yes, digital can fail, but you can protect yourself from failure with very little effort. Paper may not "fail" in the same sense, but if your plans change drastically in the air, you may not have every piece of "paper" you need. Failing to teach a student how to safely and reliably utilize the (legal) method that they will be using (during their check ride and once licensed) is just that...a failure. Any instructor worth a damn would realize this.
Paper is not the only way to teach, nor is it the only way to learn. EFB instruction SHOULD be emphasized, with paper as an alternate.
Of course, this is all moot, as eventually paper will be gone from the cockpit, and EFBs will be required. Maybe not in my lifetime, but eventually. It's a shame that some instructors can only teach the way they were taught. But I blame the FAA for that, not the instructors.