Before kernel version 1.1.54 the number of virtual consoles was compiled into the kernel (in tty.h: #define NR_CONSOLES 8) and could be changed by editing and recompiling. Since version 1.1.54 virtual consoles are created on the fly, as soon as they are needed.
Common ways to start a process on a console are: (a) tell init(8) (in inittab(5)) to start a getty(8) on the console; (b) ask open(1) to start a process on the console; (c) start X - it will find the first unused console, and display its output there. (There is also the ancient doshell(8).)
Common ways to switch consoles are: (a) use Alt+Fn or Ctrl+Alt+Fn to switch to console n; AltGr+Fn might bring you to console n+12 [here Alt and AltGr refer to the left and right Alt keys, respectively]; (b) use Alt+RightArrow or Alt+LeftArrow to cycle through the presently allocated consoles; (c) use the program chvt(1). (The key mapping is user settable, see loadkeys(1); the above mentioned key combinations are according to the default settings.)
The command deallocvt(1) (formerly disalloc) will free the memory taken by the screen buffers for consoles that no longer have any associated process.