What is the difference between below sentences.
He was seated in front of me.
He was sitting in front of me.
"Sitting" is dubiously "an activity", so the distinction is pretty much non-existent, but if you're splitting hair, seated is a passive form, used in context of state, as opposed to activity. There is no practical difference although you'd rather write about lazy, comfortable way of sitting as "being seated", and attentive, firm, active as "sitting".
There is a significant difference though, if *he was seated by someone". That means he he sat down there following someone's direction. You could say:
"We were seated in the first row of the theater by the usher"
It means the usher guided you to these chairs and asked you to sit there.
"We were sitting in the first row of the theater by the usher"
means the usher was sitting in another chair, next to yours.
The person may be implied. That means the original sentence still may imply someone seating "him".
He was led to the front row and seated in front of me.
And yes, it does create an ambiguity.
"You were seated by the exit"
doesn't mean the exit told you to sit, but that someone told you to sit next to the exit (or that you were just sitting there). And if instead of "exit" that will be "the guy selling pop-corn" it becomes quite unclear, whether someone told you to sit next to that guy, or that guy found you a place to sit.
If you are seated somewhere, it has the implication that you are sitting in a place where you were assigned to sit in some way. For example, at a dinner you were seated next to Viscount Grenobles. However, you may go to a restaurant and see a sign to please seat yourself, and you may find in a church that you will be told to please be seated from time to time. So, it isn't necessarily that someone has told you where to sit, so much as that there is an implication of assigned seating at some level. You may walk up onto a porch where people are sitting and be invited to "have a seat." This would mean to find an empty chair and sit down.
On the other hand, sitting is simply the process of bending the knees and parking the posterior somewhere.