The first one, the older one, is based on explicit line breaks entered by the user.It corresponds to typing on a typewriter, and it is common among programmers, and it's also the model on which several Internet protocols (like E-mail and Usenet protocols) are based.Your browser probably splits at least some of the strings to two lines.Such splitting can be disastrous if the user wants to type a URL into a textarea, especially if "hard" wrapping is on, since the URL will actually be split into pieces.Even with "soft" wrapping the user will be confused by the " browser standard? The approach described above has been criticized for not being user-friendly.
My tests with Netscape 4.04 on Win NT suggest that the default is (correctly) no wrapping, the value need server-side checking (or other processing of too long lines) if it is essential that lines not exceed a limit you need to set.
Quite some confusion has arisen when the two models, or conventions, have been used in the same environment without any conventions and arrangements for conversions.
The confusion is described somewhat more technically at the end of an otherwise all-too-technical Unicode report on newline guidelines.
A Usenet article by Simon Brooke summarizes this well: Textareas are for input of larger amounts of text.
Sometimes this text necessarily has arbitrarily long lines. Naive users, or users carrying expectations over from other software, become confused and disoriented either when the caret goes out of the viewport, or the viewport scrolls laterally.