There was a software package a couple decades ago, I want to say it was Lotus Notes but I'm pretty sure it wasn't actually Lotus Notes but something of that ilk, that would show a small, random number of asterisks corresponding to each character entered. So you'd hit one key and maybe two asterisks would show up on screen. And kept track of them so if you deleted a character, it'd remove two.

I thought that was kinda clever; it gives you feedback when your keystrokes are recognized, but it's just enough confusion to keep a shoulder surfer from easily being able to tell the length of your password unless you're hunt-and-pecking every single letter.

Yeah, I remember Lotus Notes both showing multiple filler characters per keystroke and showing different keychain pictures based on the hash of what you typed. This way you could also tell you've made a typo before submitting it.

Back around 1996, Notes would show hieroglyphics that changed with each new password character.

Yup, it was Notes, I used it at IBM. It was an unbelievably stupid idea. Every single day people were asking why their password was wrong because they were confused by the line of stars being too long.

Notes did indeed do that, and I as I recall it was three astrix characters per password character.