In the UNIX operating system, the end of a line is signified by a single character. It is the ASCII LF, or line feed, character (decimal 10), also represented as '\n'.
In Windows, it is two characters, a carriage return and a line feed (in that order).
These character names go back to the days of the teletypes, the old ASR model 33 TTY devices when the typewriter had a carriage and had to be returned to the left and a line feeder to move the paper up.
OK, so the end of line is a line feed. Windows does not recognize it as the end of the line and so makes it all one big line.
The Apple computers at one point were even stranger. They ended lines with a carriage return only and did not know what to do with the line feed so it was left in the line as a funny character.
Back to your question. You can use the FTP program to translate the code for you. Just choose "ASCII" or "TEXT" as the transfer mode and not "BINARY" when you want to send a text file. This will convert the line ending codes to match. On the upload, it will change your line ending code to the UNIX form; on download it will change the UNIX code to your own code.
Do this only for text files such as web page HTML files. A small side note, your web browser does not care how a line is ended or even if there are line endings.
I would suggest that you not use the web ftp but get a "real" ftp client for your workstation. Many use Filezilla which is available without charge for many platforms.
Uh, what is it that you are asking? FTP is meant to transfer files from your workstation to and from DreamHost. There is no "edit". Download the files where you wish. Edit the files there. And then re-upload them. Or, configure your use to have shell access and use SSH to connect and get a UNIX prompt on your work-space. Then you can use a text editor such as vi to edit the files directly without needing FTP.
But, if you still use FTP only, what I would suggest is that you keep a "shadow" or local copy of your files on your workstation. Do the edits there. And then upload the files to DreamHost as you change them.