You are probably using a psuedo-tty. A real tty like
this is not going to work with unicode. Real tty's and the newer glass ttys like the vt-100 used ascii and its a 7 bit code. They might connect via 300 baud modem. 1200 baud if you're lucky. Transmitting all those bit-8's, which should be zero, over a slow serial connection was not very attractive. That's why we stripped them.
But decisions like that were made by a program called getty before the login program ever ran. The line of code you ask about seems goofy to me. It will have no effect on a psuedo tty and seems like a potential disaster on a real one. I would like to know what the author was thinking.