It depends on the distribution. For example in my Ubuntu 6.06, the rc2.d scripts include gdm (The Gnome display manager). AFAIK, gdm is responsible for starting X and (in my case) Gnome--although I can't point to how this is done.
In Arch, I simply have an .xinitrc file in my home folder. The only thing in this file is "exec startkde". This puts me in the kde environment without any additional login, etc.
I think a book could be written about all the different ways of starting up and running: CLI only, window manager, display manager, desktop environment, etc.
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