The difference in binary storage of newlines in text files (<lf> versus <crlf>  versus <cr>) is something of a nuisance, but well programmed applications can cope with this in a transparent, automatic manner. A much greater difficulty arises from cultural differences in how newlines should be used.

This is how Emacs does it. ("line wrapped text"):
Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do<lf>
eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad<lf>
minim veniam, quis nostrud exercitation ullamco laboris nisi ut<lf>
aliquip ex ea commodo consequat. Duis aute irure dolor in<lf>
reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla<lf>
pariatur. Excepteur sint occaecat cupidatat non proident, sunt in<lf>
culpa qui officia deserunt mollit anim id est laborum.<lf>
<lf>
Next paragraph, etc.

This is produced by the fill command or by auto-fill-mode.

This is how most newer applications work ("flowed text"):

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ... ... laborum.<lf>
Next paragraph, etc.

In this case the application usually word-wraps the text according to the current window size.

Emacs won't gracefully produce flowed text. Turning off auto-fill-mode reverts to letter-wrap.

 Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor i*
*ncididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud*
* exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute *
*irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat null*
*a pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui off*
*icia deserunt mollit anim id est laborum.

('*' indicates an on-screen curly arrow line-wrap indicator.)

Here, words are arbitrarily broken at the end of the line, and using the up-down key will move past whole paragraphs at once.  Searching the web, it seems that Emacs users are very hostile to the idea of supporting flowed text, although it should be possible, given the extendible nature of Emacs. Converting line wrapped text to flowed text is sometimes possible, assuming blank lines separating paragraphs and no intra-paragraph newlines (such as would be found in a list). RFC 2646 describes a method for email (transmitted as line wrapped text) to be converted to flowed text.

Some of the more advanced Windows text editors, (such as textpad) will produce line wrapped text. It is a simple operation to convert flowed text to line wrapped text.

Each style has its own advantages. Line text offers an unambiguous on-screen representation of the text file and is more suitable for use with standard Unix tools such as grep and diff. Line text is the style of choice for program source code. Flowed text seems more suitable when writing documents. It automatically fits any column width and is more malleable. For example, when re-editing in Emacs you get something like this:

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do<lf>
eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad<lf>
minim veniam, quis nostrud exercitation ullamco laboris nisi ut<lf>
aliquip ex ea commodo consequat. Foo bar foo bar blah blah blah. Duis
aute irure *
*dolor in<lf>
reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla<lf>
pariatur. Excepteur sint occaecat cupidatat non proident, sunt in<lf>
culpa qui officia deserunt mollit anim id est laborum.<lf>
<lf>
Next paragraph, etc.

To fix this requires the user to issue a manual 're-fill' command (M-q). There is a re-fill mode to handle this automatically, but the documentation describes this as preliminary and probably not robust.