One example where hundreds of people need to be able to physically log into a single workstation is an educational computer lab where you have a 20 or so shared

One example where hundreds of people need to be able to physically log into a single workstation is an educational computer lab where you have a 20 or so shared workstations, and requiring assigned seating would be cumbersome. Having a common passwd file for personal workstations is also an understandable configuration for ease of administration, though it of course has its drawbacks.