This is how the Rotary Phone Hook works.

When you put the phone on the hook, it presses down on the bar which disconnects the line as seen in the video.

https://plus.google.com/photos/104359338500189725198/albums/5951721202516531601/5951721205362892498?pid=5951721205362892498&oid=104359338500189725198

Basically, there is 2 connectors, 4 wires.

The one to the left is disconnected when the rotary is at the starting position, connected when it’s not.

The one to the right has a plastic piece which allows both pins to move along the spinning thing. When the rotary is released, the plastic piece goes back and holds the pin to the left so it is pushed against the pin to the right making a connection. Depending on the number of times the connection is made, that is the number dialed.