The voltage from the "I" terminal comes from the instrument cluster. There is a little light in the dash, on my 89 it is a picture of a little red battery. The voltage comes from the keyswitch up into the cluster, through the circuit board and the light bulb, and then back out of the light bulb, through the large cluster plug, and out to the "I" terminal.
This brings the alternator system "online". If you left the "I" terminal hot all the time, the alternator would run the battery down.
How it works; When you first turn the keyswitch on, voltage goes through the light bulb(this light bulb is not grounded) and to the "I" terminal. The regulator receives this signal, but the voltage is low enough that you have 12v on one side of the cluster bulb, and something close to ground at the "I" terminal, enough that the bulb lights up. When the engine is started and the alternator has output, the regulator recognizes this, and brings the voltage on the "I" terminal up to 12v. This cuts the dash light off, since now it has 12v on one side from the keyswitch, and 12v on the other side of the bulb from the regulator "I" terminal.
If you throw a belt or have a alternator failure(or the engine stops with the keyswitch on), the system will quit charging, the voltage on the "I" terminal will drop down low, and the little battery light in the dash will light up.
