How did the hardware know the software was foreign?
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Earlier consoles (think cartridge format) used a different physical connector in most cases. The Super Nintendo in the US had two plastic knobs that prevented European and Japan games from being inserted.
This was required at the time because European television sets operated in a different frequency range of 50Hz than the US 60Hz range.
The 1989 Gameboy never had that issue because the screen was constant across regions.
When Optical media became a thing (Sony PlayStation, later DVDs), there was still a 50Hz frequency issue in Europe so region locking was encoded onto the player to match the discs encoding. This issue is a thing of the past now, so anything still region locked is more than likely a pricing strategy.
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