Line-by-line processing when stdin is not a tty

[Nobody]

This doesn't explain why "cat | cat" when run interactively outputs
line-by-line (which it does). STDIN to the first cat is a TTY, but the
second one isn't.

GNU cat doesn't use stdio, it uses read() and write(), so there isn't any
buffering.

For more complex programs, using unbuffered I/O may not be practical,
due to either code complexity or performance.