Depends on where they were. In Japan, the culture has always been "one credit, if you game over, you don't continue." Most "experienced" arcade-goers in the west did the same thing, since it lets you get a lot more playtime/credit; continue-heavy play has generally been the domain of kids and casuals.
Again, simply not true -- tons of classic arcade games only show you the ending if you do it on one credit. Even ones that are derided as "quarter munchers" frequently are this way; for instance, people say the Capcom brawlers were quarter-munchers, but Final Fight only shows its "true" ending if 1cc'd, and you can only see the final stage in Shadow Over Mystara or Battle Circuit if you've 1cc'd to that point (and Battle Circuit has some more criteria on top of that which you have to succeed at). One-credit play was always the expected "norm" for Japanese arcade developers.
There are arcade games that have generous health and only one life (the Capcom D&D brawlers both come to mind), but there are also plenty of games where dying once will typically end your credit, even if you have multiple lives. For instance, if you die in a bad spot in Final Fight, you're frequently going to just get killed immediately on your respawn, and in a lot of classic shmups, the power-loss from one death means that recovery is essentially impossible.