That's because Ctrl+D is a hack.

Deep down, Ctrl+D (despite being called the eof character) doesn't actually mean end-of-file: it means “send the pending input to the application now”. This is actually close to the meaning of Ctrl+M (eol), which sends the pending input plus a newline.

When you press Ctrl+D immediately after a Ctrl+M (i.e. at the beginning of a line) or after another Ctrl+D, the pending input is empty. Thus the application receives 0 bytes of input. In a read call, reading 0 bytes signals the end of the file.

When you press Ctrl+Z, the pending input is discarded. Thus only what had already been sent to the application (which is cat) by entering a newline or Ctrl+D before pressing Ctrl+Z is processed.

That's because Ctrl+D is a hack.

Deep down, Ctrl+D (despite being called the eof character) doesn't actually mean end-of-file: it means “send the pending input to the application now”. This is actually close to the meaning of Ctrl+M (eol), which sends the pending input plus a newline.

When you press Ctrl+D immediately after a Ctrl+M (i.e. at the beginning of a line) or after another Ctrl+D, the pending input is empty. Thus the application receives 0 bytes of input. In a read call, reading 0 bytes signals the end of the file.

When you press Ctrl+Z, the pending input is discarded. Thus only what had already been sent to the application (which is cat) by entering a newline or Ctrl+D before pressing Ctrl+Z is processed.