A simple curses example. See the docs for the curses module for details.
import curses
stdscr = curses.initscr()
curses.cbreak()
stdscr.keypad(1)
stdscr.addstr(0,10,"Hit 'q' to quit")
stdscr.refresh()
key = ''
while key != ord('q'):
key = stdscr.getch()
stdscr.addch(20,25,key)
stdscr.refresh()
if key == curses.KEY_UP:
stdscr.addstr(2, 20, "Up")
elif key == curses.KEY_DOWN:
stdscr.addstr(3, 20, "Down")
curses.endwin()