If you've done your homework, then you already have a good understanding of how single-line phones work from the HowStuffWorks article How Telephones Work. Whereas single-line phones have just one jack, two line phones have either two or three. If your telephone lines aren't combined into one cord, you plug the first line in the first jack and the second line in the second jack. If the lines are combined, you just plug the single cord into the third jack, which is designed to detect all four wires.
At the simplest level, two-line phones establish a connection the same way single-line phones do; they just have two of everything. The conductors in the phone jack detect whether a first and second land line exist and then assign each line to the appropriate user interface. Line one functions are controlled by one interface, and line two functions by another. Condition detectors inside the phone recognize if the phone lines are connected to landlines and then operate accordingly. These detectors select one of the two phone lines for use when they check for predetermined conditions, such as the particular line's phone number. Two line phones also use opto-isolator means, which isolate the line circuits and prevent cross talk.
Two-line phones can operate flexibly depending on how the phone lines are connected. Sometimes just line one may be in use, sometimes just line two and sometimes both. A switching mechanism inside the phone detects when one of the lines is in use and causes a light on the phone to light up to signal that the line is being used. Depending on the phone model, several other switching mechanisms may exist for the implementation of functions like hold, intercom and conference calling. Conference calls enable the telephone user, the person on line one and the person on line two to talk to one another.
While you're more likely to see a six- or twelve-line phone in most large businesses, two-line phones still have their place. Whichever two-line phone you settle on, if you have a chatty household, the extra line capability will leave you wondering how you ever survived with just one. For more on telephones and two-line phones, dial up some of the links on the following page.