I had to take a look at "sed" just to see what the problem was; it shouldn't be that big. I looked and I see what the issue is, and I feel like Charleton Heston catching first sight of a broken statue on the beach. All of what I'm about to describe for "sed" might also apply to "tar". But I haven't looked at it (yet).
A lot of GNU code got seriously grunged up - to the point of unmaintainable morbid legacy - for reasons I don't know. I don't know exactly when it happened, maybe late 1990's or early 2000's, but it was like someone flipped a switch and suddenly, all the nice modular mostly self-contained code widgets got massively grunged with all sorts of extraneous entanglements having little or no connection to what the application itself was trying to do.
In your case, "sed": an entire library got (needlessly) dragged in with the application. This was the case at least as early as version 4.2 (the last version predating your query), probably before that - I'd have to check.
Another thing that got grunged up was the build system (again) to the point of unmaintainability.
So, you're really talking about legacy rescue here.
My advice ... which is generic for any codebase that's been around a long time ... is to dig as deep as you can and go back to its earliest forms first; and to branch out and look at other "sed"'s - like those in the UNIX archive.
https://www.tuhs.org/Archive/
or in the BSD archive:
https://github.com/freebsd
https://github.com/weiss/original-bsd
(the second one goes deeper into early BSD in its earlier commits.)
Many of the "sed"'s on the GNU page - but not all of them - may be found under "Downloads" as a link "mirrors" on the GNU sed page:
https://www.gnu.org/software/sed/
Version 1.18 is still intact. Version 1.17 is implicitly intact, since there is a 1.17 to 1.18 diff present there. Neither version has all the extra stuff piled on top of it. It's more representative of what GNU software looked like, before before becoming knotted up with all the entanglements.
It's actually pretty small - only 8863 lines for the *.c and *.h files, in all. Start with that.
For me the process of analysis of any codebase is destructive of the original and always entails a massive amount of refactoring and re-engineering; and simplification coming from just writing it better and more natively, while yet keeping or increasing its functionality. Almost always, it is written by people who only have a few years' experience (by which I mean: less than 20 years, for instance) and have thus not acquired full-fledged native fluency in the language, nor the breadth of background to be able to program well.
For this, if you do the same, it's strongly advised that you have some of test suite already in place or added. There's one in the version 4.2 software, for instance, though it may be stress-testing new capabilities added between 1.18 and 4.2. Just be aware of that. (So, it might require reducing the test suite to fit 1.18.) Every change you make has to be validated by whatever tests you have in your suite.
You need to have native fluency in the language ... or else the willingness and ability to acquire it by carrying out the exercise and others like it. If you don't have enough years behind you, you're going to hit a soft wall. The deeper you go, the harder it might be to move forward. That's an indication that you're not experienced enough yet, and that you don't have enough breadth. So, this exercise then becomes part of your learning experience, and you'll just have to plod through.
Because of how early the first versions date from, you will have to do some rewriting anyhow, just to bring it up to standard. Later versions can be used as a guide, for this process. At a bare minimum, it should be brought up to C99, as this is virtually mandated as part of POSIX. In other words, you should at least be at least as far up to date as the present century!
Just the challenge of getting it to be functional will be exercise enough. You'll learn a lot of what's in it, just by doing that. The process of getting it to be operational is establishing a "baseline". Once you do that, you have your own version, and you can start with the "analysis".
Once a baseline is established, then you can proceed full throttle forward with refactoring and re-engineering. The test suite helps to provide cover against stumbles and inserted errors. You should keep all the versions that you have (re)made in a local repository so that you can jump back to earlier ones, in case you need to track down the sudden emergence of test failures or other bugs. Some bugs, you may find, were rooted all the way back in the beginning (thus: the discovery of hidden bugs).
After you have the baseline (re)written to your satisfaction, then you can proceed to layer in the subsequent versions. On GNU's archive, 1.18 jumps straight to 2.05. You'll have to make a "diff" between the two to see where all the changes were, and then graft them into your version of 1.18 to get your version of 2.05. This will help you better understand both the issues that the changes made addressed, and what changes were made.
At some point you're going to hit GNU's Grunge Wall. Version 2.05 jumped straight to 3.01 in GNU's historical archive. Some entanglements started slipping in with version 3.01. So, it's a soft wall we have here. But there's also an early test suite with 3.01, which you should use with 1.18, instead of 4.2's test suite.
When you hit the Grunge Wall, you'll see directly what the entanglements were, and you'll have to decide whether to go along for the ride or cast them aside. I can't tell you which direction is the rabbit hole, except that SED has been perfectly fine for a long time, most or all of it is what is listed in and mandated by the POSIX standard (even the current one), and what's there before version 3 serves that end.
I ran diffs. Between 2.05 and 3.01, the diff file is 5000 lines. Ok. That's (mostly) fine and is natural for code that's in development, but some of that may be coming from the soft Grunge Wall. Running a diff on 3.01 versus 4.2 yields a diff file that over 60000 lines. You need only ask yourself: how can a program that's under 10000 lines - that abides by an international standard (POSIX) - be producing 60000 lines of differences? The answer is: that's what we call bloat. So, between 3.01 and 4.2, you're witnessing a problem that is very common to code bases: the rise of bloat.
So, that pretty much tells you which direction ("go along for the ride" versus "cast it aside") is the rabbit hole. I'd probably just stick with 3.01, and do a cursory review of the differences between 3.01 and 4.2 and of the change logs to get an overview of what the changes were, and just leave it at that, except maybe to find a different way to write in what they thought was necessary to change, if the reason for it was valid.
I've done legacy rescue before, before the term "legacy" was even in most people's vocabulary and am quick to recognize the hallmark signs of it. This is the kind of process one might go through.
We've seen it happen with some large codebases already. In effect, the superseding of X11 by Wayland was a massive exercise in legacy rescue. It's also possible that the ongoing superseding of GNU's gcc by clang may be considered instance of that.
