Right now I am learning Java and my professor showed me that you can declare other methods in the main method even when they are created after the main method inside the class. I noticed I can't do this in the SED editor. Why is that? Can you actually do that or is not possible with SED?

I don't know about Java, but Lite-C is - as the name says - based on C. That's a whole different story. (And has btw nothing to do with SED.)

You can't declare other methods neither in main nor in other functions.
Lite-C is not object oriented language. There are no methods, there are only functions.
You can't declare functions inside another functions.