1. I concede knowing nothing about the early Python library implementation, functionality, or even purpose.

2. I don't think it makes sense now to either refer to PEM. We'd be two decades too late for that (well, 27 years, to be precise :). See
 https://en.wikipedia.org/wiki/Privacy-enhanced_Electronic_Mail

3. I don't think we are in position to tell programmers how to split a string of characters into 76-long chunks. Not to mention that the example you gave is likely to suffer in performance (just count those function calls), compared to other methods, and won't reflect well on the authors.

Here's one possible doc version:

'''
Convert binary data to the base 64 encoding defined in :rfc:`4648`. The return value includes a trailing newline ``b"\n"`` if *newline* is true.

If the output is used as Base64 transfer encoding for MIME (:rfc: 2045), base 64 output should be broken into lines at most 76 characters long to be compliant. Base64 encoding standard does not limit the maximum encoded line length.
'''