As we continue the journey, looking at Entity and EntityDocument within Wikibase, another useful thing to look at are the third and fourth widely used (at least within the Wikimedia space) entity types for Wikibase.
Both of these entity types make use of the EntityDocument, with none of the old assumptions baked into the Entity base class that used to exist.
MediaWiki extensions
As these entity types were decoupled from the main body of Wikibase, they were developed as MediaWiki extensions. https://www.mediawiki.org/wiki/Extension:WikibaseMediaInfo and https://www.mediawiki.org/wiki/Extension:WikibaseLexeme
This was the easy choice at the time, and probably still makes perfect sense, as Wikibase itself is a MediaWiki extension, and there is already a common pattern of extensions extending extensions. This ultimately saves some work around coding an extension mechanism, though we should remember that ultimately the Wikibase codebase has free choice when it comes to choose how it can be extended.