How do I edit previous lines in a multiple line command in Bash?

That, unfortunately, is up to bash, not to the terminal. Your options are:

1. Use semicolons instead of newlines, although even then you can't move up a screen line at a time but must use character or word motion commands. (Oddly, zsh at least lets you move within a compound command when editing history, just not within the current command.) Sometimes fc (which tosses you into your editor with the previous command) is the easiest way to handle compound commands.

2. If you are using Bash, use the following key combination:

   ctrl x e
   

   It will open up the command you are working on using your text editor. Save the file and quit. (I found the command on the Shell Hater's presentation.) Zsh users have this alternative.

The solution is to never enter a command until the multi-line is right, just type: CtrlvCtrlj when you want to go to the next line. Metab to go back a word.

credit to @rici's answer

Funnily enough, Ctrl+C is what you are looking for.

when you are on

$ echo "foo bar
> baz
>

just press Ctrl+C (edited command line will suspend) and press Up (previous-history). Your prompt will be: (note the absence of >)

$ echo "foo bar
baz

Now you can move around with Left Right even through line jumps.

There is only one quirk, you must be on the last character to add another line, so move around to edit existing lines (go to start with Ctrl+A) an press Enter if that's enough or goto end (Ctrl+E) to add more lines with Enter. Another drawback is that Ctrl+_ (undo) only restores changes from last Ctrl+C