"Instead of just going off hook and completing the loop to get Dial Tone, you (the PBX) have to apply a momentary ground to the Ring side of the line. The CO recognizes a request for DT and returns a ground on the Tip side of the line. The PBX recognizes the confirmation signal and connects a load to the circuit, completing the loop. When the distant end hangs up, the CO opens the Tip side of the line and the PBX recognizes the disconnect signal and hangs up the line."

OK, another question (questions rather) if I may. What exactly do you mean by Central Office? Like the telco HQ?

Second, how can you "return grounds"!? I know that across the live tip (+) and ring (-) connectors you have a certain amount of negative voltage (-48?), which is made possible by "putting ground on the positive" (another concept I'm confused about). How can you put ground on the positive? Very confused!