While I'm reading E. Landau's Grundlagen der Analysis (tr. Foundations of Analysis, 1966), I couldn't understand the proof of Theorem 3 at the segment of Natural Numbers which I've quoted below.
Theorem 3: If
$$x \neq 1$$ then there exists one (hence, by Axiom 4, exactly one) $u$ such that
$$x = u'$$ Proof: Let $\mathbb{S}$ be the set consisting of the number $1$ and of all those $x$ for which there exists such a $u$. (For any such $x$, we have of necessity that
$$x \neq 1$$ by Axiom 3.)
I) $1$ belongs to $\mathbb{S}$.
II) If $x$ belongs to $\mathbb{S}$, then, with $u$ denoting the number $x$, we have
$$x'=u'$$
so that $x'$ belongs to $\mathbb{S}$.
By Axiom 5, $\mathbb{S}$ therefore contains all the natural numbers. $\square$
Sir Landau refers to the Axioms of Peano on proof text. Can someone explain what's going on?
Here the axioms for $\mathbb N$ as of set natural numbers probably take the shape:
In the proof that you quote it is proved that the set $\mathbb S$ (as defined in your question) satisfies these conditions, justifying the conclusion that $\mathbb S=\mathbb N$.
So if $x\in\mathbb N$ and $x\neq1$ then $x\in\mathbb S$ and $x\neq 1$, which means exactly that $x=u'$ for some $u\in\mathbb N$.
edit:
Let $\mathbb S\subseteq\mathbb N$ with: $$\mathbb S=\{1\}\cup\{x\in\mathbb N\mid x=u'\text{ for some }u\in\mathbb N\}$$
Then $1\in\mathbb S$ so in order to prove that $\mathbb S=\mathbb N$ it is enough to prove that $x'\in\mathbb S$ for every $x\in\mathbb S$.
Note now that it is immediate that we have $x'=u'$ for some $u\in\mathbb N$.
For which $u\in\mathbb N$ then?... Well, for $u:=x$.