The Line Ends & Tabs operations work on the selected text, or on the entire file if no selection has been made.
Text documents produced by most Mac editors normally contain Carriage Return (CR) characters at the end of paragraphs only, not at the end of lines. Text lines themselves are broken using word wrap but without any special line end characters. Other computers and operating systems treat line ends differently. Some systems add a Linefeed or Newline (LF) character at the end of every line, some add a Carriage Return (CR), and some add both a CR and a LF.
The Line Ends & Tabs menu lets you change line endings in various ways. When you choose Add CR or Add CR/LF, MuEdit asks you what line size you want. It then uses word wrapping to break the lines so their lengths are within the given size, and adds a CR or a CR and a LF at the end of each line. You can also remove these extra characters by choosing the menu items Strip CR, Strip LF, and Strip CR/LF.
To change line lengths, you should first strip the line end characters, then add them with the desired new line length.
After adding CRs to the whole document, you probably also want to turn off word wrap before editing the document any further.
Using Line Ends & Tabs, you can also convert tab characters into any desired number of spaces. When you check Replace Tabs by Spaces, MuEdit asks you for the number of spaces per tab, and replaces all existing tabs by this many spaces. When you uncheck that box, any tab characters you type subsequently will not be replaced by spaces.