Removing the need for telephone lines, hosted telephony runs over SIP trunks. Think of SIP trunks as virtual phone lines. Instead of routing over copper cables underground, call traffic is transmitted over the internet as data. That data either travels from IP source to IP destination or breaks out to the PSTN for non-IP calls.
This could be another handset on your hosted telephony estate (IP). It could be a landline in another country (non-IP). The concept of a phone call doesn’t change. It simply gets routed over the internet, in a secure, efficient manner.
The SIP trunks themselves are configured within the infrastructure by the vendor. This removes the need for a customer to install or configure any equipment. You could think of it as a data centre housing everything on one huge telephone system, with a separate partition for each customer.