A processor has a limited amount of physical resources. For example, it has only one register set. But every process on the machine has its own set of registers. Depends on the hardware. Processor Status Word.
Most machines allow memory from multiple processes to coexist in the physical memory of the machine.
The keystroke is echoed on the screen. A user program issues a system call to read a file. The operating system figures out which disk blocks to bring in, and generates a request to the disk controller to read the disk blocks into memory. The disk controller finishes reading in the disk block and generates and interrupt. The OS moves the read data into the user program and restarts the user program.