In a program called a debugger, which back then was known as a monitor. You pressed a button, and the monitor was started from a cartridge, or you loaded a monitor, and then you loaded the machine code. And then you stepped through that disassembled code, and then you inserted a breakpoint in a strategic place. And when the program would stop execution, you'd consider the state of the program, and then you'd make the desired modifications, either by changing the existing processor instructions, or by adding your own code and hooking it in. Worked for an entire generation of crackers, I don't see what the big deal is.

So in that sense, there was no closed source, as nobody can really hide machine code, and believe you me, people have tried, and then some! But to a cracker, to a really good coder, every piece of code is open source, because there is nowhere to hide.

A much bigger deal was if you were not capable of this, because it meant you were a lamer and didn't make the cut.