TextEdit is great for making/reading rtf files and even simple doc files. Nice support for the most important formatting, and could be the only word processor you
really need.
It's just that as a text editor, for text files (txt, html, php, etc.) it's just not nearly as good as the above mentioned editors. It also has a tendency to revert back to rich text format when you edit e.g. html files and it has, on more than one occasion, messed up files I've worked on to do small changes (this was after BBEdit Lite just didn't cut it any more, and before TextWrangler became freeware and I discovered SubEthaEdit, when I actually tried using TextEdit as my main text editor...
).