Question

Does it actually read character by character or does it read some bytes into the kernel buffer and return to the user- character by character?

Is it the same with fgets?

Let me say I use glibc and a gcc compiler.

Answer 1

Almost right. A typical modern implementation that does have a user/kernel separation stores the bytes in a user buffer, not in a kernel buffer. Thus many calls to fgetc actually trigger few true system calls.