In general, if there are N blue-eyed people, then it is the Nth abstraction of "he knows that I know that he knows that I know that..." that is learned by the statement.
In general, if there are N blue-eyed people, then it is the Nth abstraction of "he knows that I know that he knows that I know that..." that is learned by the statement.
Yes, they do. In the three-person case, a blue-eyed person can see two other blue-eyed people, A and B, and they know that A can see B, and vice-versa, so they know that A and B both know that there are blue-eyed people, and they know that both A and B would be able to us the same logic they used, so they also know that A and B know that A and B know that there are blue-eyed people.
(Of course, I am assuming that all the people think/reason exactly the same and that they all know that they think/reason exactly the same, which are assumptions of the original problem.)