init is invoked inside UNIX as the last step in the boot procedure. It first carries out several housekeeping duties...
init then forks several times so as to create one process for each typewriter channel on which a user may log in.
Unix Programmer's Manual, First Edition dated November 3, 1971

When you type to UNIX, a gnome deep in the system is gathering your characters and saving them in a secret place. The characters will not be given to a program until you type a return.
Unix Programmer's Manual, Third Edition K. Thompson, D. M. Ritchie February, 1973

The evidence that you have successfully logged in is that the Shell program will type a ‘$’ to you.

To remind the super-user of his responsibilities, the Shell substitutes ‘#’ for its usual prompt.
UNIX™ TIME-SHARING SYSTEM: UNIX PROGRAMMER’S MANUAL Seventh Edition, Volume 1 January, 1979

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