I've written ANSI terminal handling before. The original VT100 paper manual that came with the terminal is a nice start, because the complexity hadn't really happened yet and people used to write useful documentation. With that as a starting point for understanding it isn't hard to extend into handling the full spec.

That diagram you linked is actually quite nice, but visually intimidating. If you think of it as a handful of regular expressions exploded into a state diagram that helps. For instance, the entire left half of the diagram is just the CSI code acceptor, see "CSI (Control Sequence Introducer) sequences" on the "ANSI escape code" wikipedia page.

You can write a regular expression to match a CSI and carry on. This is 2023 and you aren't using an 8080 with 3k of RAM. (probably) The only tiny trick is that you have to handle the "incomplete trailing regex" and wait for more data to arrive and try again.

As for handling reflow. I wouldn't call that an "implementation" problem. I'd call it a "specification" problem. I'd approach it by seeing what Apple's Terminal program does, write that down, and call that my specification.