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I supported such a system many years ago!

Cards (80 bytes each) are read one at a time from the card reader.

The card records are written to a holding file, our system used 8-track magnetic tape for this, but most systems for the last 20 years or so write the data to disk.

When there are no more cards the output file is closed.

Once the output file is closed it is available for the application to read as input. In our installation the input spooling process took place on a fairly small computer (128KB memory - note that is KB not MB or GB!!) and the tapes were later processed on the 'big' machine.

The main advantage was that the applications could run at the very high speed of the tape drives rather than the very very slow speed of the card reader. Also if an application failed (bombed out) then the operators did not have to feed the cards through the reader a second time - an expensive operation if you have 100,000 cards to process!

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