In UNIX, your access to a commandline shell is via a terminal. This harks back to the days when folks accessed their big shared computers literally via terminals connected directly to the machines (e.g. by a serial cable).
In fact, the 'xterm' program or whatever derivative you use on your UNIX box is properly referred to as a terminal emulator - it behaves (from both your point of view and that of the operating system) much like one of those old-fashioned terminal machines.
This makes it slightly complicated to handle input in interesting ways, since there are lots of different kinds of terminals, and your UNIX system has to know about the capabilities of each kind. These capabilities were traditionally stored in a termcap file, and I think more modern systems use terminfo instead. Try
man 5 terminfo
on a Linux system for more information.
Now, the good news is that you don't need to do too much messing about with terminal capabilities, etc. to have a commandline application that does interesting things with input or windowing features. There's a library, curses, that will help. Lookup
man 3 ncurses
on your Linux system for more information. You will probably be able to find a decent tutorial on using curses online.