It’s a great story that reminds us complicated solutions can have very simple solutions. But the Russian pencil story is just a myth, though.
When you rub an eraser across a pencil mark, the abrasives in the eraser gently scratch the surface fibers of the paper to loosen the graphite particles.
It’s Saturday, so time for some fun physics. This non-trivial question is often asked in international physics contests and requires a bit of out of the box thinking.