Its an actual cursor

term.clear()
w,h = term.getSize()
local x,y = term.getCursorPos()
local str = ""
local posX,posY --= nil,nil
local elements = {}
  --"x,y" = {"string",colors.text,colors.back}


function draw(words,x,y,col,back)
  words = tostring(words) or ""
  col = col or colors.white
  back = back or colors.black
  if x and y then
    term.setCursorPos(x,y)
    posX,posY = x,y
    for i=1,#words do
      posX,posY = tostring(posX),tostring(posY)
      local coord = posX..","..posY
      elements[coord] = {words:sub(i,i),col,back}
      posX = tonumber(posX) + 1
    end
  end
  term.setTextColor(col)
  term.setBackgroundColor(back)
  write(words)
  posX,posY = nil,nil
end

draw("string",7,5,colors.green,colors.white)
draw("here's more",14,5,colors.purple,colors.grey)

--[[term.setCursorPos(1,7)

for i,v in pairs(elements) do
  write(i.." : ")
  for k=1,#v do
    write(tostring(v[k]).." ")
  end
end

for i,v in pairs(elements) do
  local half = i:find(",")
  draw(v[1],i:sub(1,half-1),i:sub(half+1)+1,v[2],v[3])
end]]


function clearMove(k,l)
  for i,v in pairs(elements) do
    local half = i:find(",")
    local px = tonumber(i:sub(1,half-1))
    local py = tonumber(i:sub(half+1))
    if k == px and l == py then
      draw(v[1],x,y,v[2],v[3])
    else
      draw(" ",x,y)
    end
  end
end

while true do
  e = {os.pullEvent()}
  if (e[1] == "mouse_drag" or e[1] == "mouse_click") and e[2] == 2 then
    clearMove(x,y)
    x,y = e[3],e[4]
    for i,v in pairs(elements) do
      i = tostring(i)
      local half = i:find(",")
      if tostring(x) == i:sub(1,half-1) then
        --if tostring(y) == i:sub(half+1) then
          str = "I"
        --end
      else
        str = "^"
      end
    end
  elseif e[1] == "mouse_click" and e[2] == 1 then
    clearMove(x,y)
    x,y = e[3],e[4]
    str = "*"
  end
  draw(str,x,y)
end