Keep in mind that a lot of the keyboard features we take for granted weren't always present on early terminals. Navigating is a lot harder if you don't have, say, arrow keys. In that case, a separate mode makes a lot of sense for getting around (no arrow keys? Just map hjkl to them in navigation mode). Plus the same command can do different things depending on mode, so there are less distinct patterns of keypresses to memorize. Yes, you could do everything as a series of chords (like in emacs), but I don't think it's necessarily superior.

Here's a list of some navigation mode commands. You can probably come up with reasonable ways to do them with only the keyboard & none of the alphanumeric or punctuation keys used alone, but would that be any easier? http://www.thegeekstuff.com/2009/03/8-essential-vim-editor-n...