It is common to describe ed(1) as being line oriented, as opposed to screen oriented editors like vi. This is completely accurate but it is perhaps not a complete enough description for today, because ed is line oriented in a way that is now uncommon. After all, you could say that your shell is line oriented too, and very few people use shells that work and feel the same way ed does.

The surface difference between most people's shells and ed is that most people's shells have some version of cursor based interactive editing. The deeper difference is that this requires the shell to run in character by character TTY input mode, also called raw mode. By contrast, ed runs in what Unix usually calls cooked mode, where it reads whole lines from the kernel and the kernel handles things like backspace. All of ed's commands are designed so that they work in this line focused way (including being terminated by the end of the line), and as a whole ed's interface makes this whole line input approach natural. In fact I think ed makes it so natural that it's hard to think of things as being any other way. Ed was designed for line at a time input, not just to not be screen oriented.

(This was carefully preserved in UofT ed's very clever zap command, which let you modify a line by writing out the modifications on a new line beneath the original.)

This input mode difference is not very important today, but in the days of V7 and serial terminals it made a real difference. In cooked mode, V7 ran very little code when you entered each character; almost everything was deferred until it could be processed in bulk by the kernel, and then handed to ed all in a single line which ed could also process all at once. A version of ed that tried to work in raw mode would have been much more resource intensive, even if it still operated on single lines at a time.

(If you want to imagine such a version of ed, think about how a typical readline-enabled Unix shell can move back and forth through your command history while only displaying a single line. Now augment that sort of interface with a way of issuing vi-like bulk editing commands.)

This is part of why I feel that ed(1) was once a good editor (cf). Ed is carefully adapted for the environment of early Unixes, which ran on small and slow machines with limited memory (which led to ed not holding the file it's editing in memory). Part of that adaptation is being an editor that worked with the system, not against it, and on V7 Unix that meant working in cooked mode instead of raw mode.

(Vi appeared on more powerful, more capable machines; I believe it was first written when BSD Unix was running on Vaxes.)

Update: I'm wrong in part about how V7 ed works; see the comment from frankg. V7 ed runs in cooked mode but it reads input from the kernel a character at a time, instead of in large blocks.