I can recall people being very impressed at unix systems being able to handle many clients

That seems odd to me, too, because before DOS and the Commodore 64/Apple ][ era, multi-user systems were everywhere.

Not just mainframes and minicomputers, but there were many dozens of multi-user systems based on CP/M, MP/M, and other operating systems. Even Tandy had them.

The revolutionary part of the "personal computer" era was that it was your "personal" computer. You finally didn't have to share it with anyone.

Everyone seems to assume you need protected mode to run multi-user systems, too.

It wasn't as secure or as easy, but you could certainly do multi-user systems without protected mode and within very small RAM amounts.

There were also commercial multi-user systems like Compuserve and Delphi.