1've just been looking up the process. This from Wiki:
In England and Wales, a team of 65,000 enumerators[7] delivered forms ahead of the chosen day. On Friday 29 September 1939, householders were required to record details on the registration forms. On the following Sunday and Monday the enumerators visited every householder, checked the form and then issued a completed identity card for each of the residents. All cards at this time were the same brown/buff colour. Some 45 million identity cards were issued.[6] The estimate of the population of England and Wales for 1939 was 41.465 million exclusive of army, navy and merchant seamen abroad,[8] and some sources record the register as [clarification needed]so the figure of 45 million may include the members of the armed forces abroad or in Scotland.
So it would seem that, the individual household forms were then used to compile a 'living register' for use to record changes in individuals' identities.
ADD - And, obviously, in addition to Identity Cards, they were used for Ration Cards, National Health info, etc.
add 2 - I did know this but was unsure of how the info was collected and collated.