Yes the input shaft slides into the pilot shaft bushing. There is a stepped down area at the very beginning that fits in there. It supports that input shaft and takes a lot of the lateral load off the main bearing at the front of the transmission. Early pilot shaft bushings were made from "Oil-lite Bronze" A porous casting with lots of holes for oil to hide in. That bushing is made to be sacrificed, it wears much faster than the expensive main shaft. Just for an easy read:
http://en.wikipedia.org/wiki/Oilite
