So why is this so popular anyway?

Because it's extremely fast and powerful once you know what you're doing. I can edit at least 3-5 times as quickly using Vim as anything else I've tried. Maybe more, I haven't benchmarked it. :-)

And with Vim just about everything is customizable so if you don't like the way something works by default, you can configure it how you want it. For example, your truncated lines example: use :set wrap and presto, line-wrapping. And the help documentation (:help) in Vim is very good. It's how I've learned almost everything I know about Vim.

Oh, and for getting rid of newlines between lines, I think you were missing the 'J' command (join two lines). Or maybe :set backspace=eol, which allows you to backspace over newlines in Insert mode.