TeX will insert \endlinechar at the end of line.
If the value of
\endlinecharis negative or greater than 255, no character is appended, and the effect is as if every line ends with %.
\def\endlinechar{\char256}
hello
hello2
\bye
produces
Even if the \endlinechar has been changed to greater than 255, the character is still append to the end of the line, which cause the effect as \par at the end of the line. What is the reason?
\endlinechar is an internal integer register. Assigning it a value is done in the standard way, namely
\endlinechar=<integer>
just like
\count255=42
In Knuth TeX or pdftex you can assign it the value 256, which would result in nothing being appended to a record after discarding the OS specific end-of-record signal and trailing characters with ASCII code 32.
If you do \def\endlinechar{whatever}, you just lose the ability to change the value of the internal register.
Note. XeTeX behaves like Knuth TeX as far as \endlinechar is concerned, so only values between 0 and 255 (inclusive) will result in some character being appended. LuaTeX lowers the upper bound to 127.
You should have been surprised that the code doesn't raise errors. Indeed, your \endlinechar macro is never used, otherwise \char256 would have raised an error (in Knuth TeX or pdftex).
\endlinechar-the-primitive, you've created a macro of the same name: you want\endlinechar=256 %\endlinechar=256. From what page I should watch to learn this style of definition?