It refuses to open files it doesn't like the filetype of, it won't save as an arbitrary filetype, it defaults to being a variable-width font and it has a few too many bells and whistles because it's clearly meant to edit RTF files, I'd say. Sometimes you want something completely spartan.
It opens anything — the "Open" dialog will allow you to select any filetype and you can also drop any kind of file onto the TextEdit icon in the Dock to open it.
As for plain-text, you can go into the Settings and switch it into plain-text mode, which it remembers.
You can even set it not to append ".txt" to the filename when saving, allowing you to enter whatever file extension you want when saving.