What should I do if someone buys my game on itch but then requests a refund through PayPal?Can I provide the buyer's purchase proof to PayPal to resolve the dispute?

Never send someone a “refund” by paying them in a separate transaction. Always reverse the original transaction, this can be done by contacting itchio support if you aren’t using direct payments on your account. If there’s a dispute then you can approve of the refund to resolve the dispute.