A leads actually do several things: When just going off-hook, they close a relay causing the line's lamp to light. This is done by a ground being placed on the line's A lead.
If the line is in use and the ground is removed from the A lead, it causes another relay to operate placing a high-resistance short on the line to hold it and changes the lamp from steady to winking.
On an incoming call, when going off-hook, the A lead also stops the incoming ringing that is usually generated within the KSU unless bridged CO line ringing is being used.
Note that all relays mentioned are components of the line card itself. The KSU does not have any "intelligence" at all. The only electronics to speak of are within the power supply.
The interrupter is also a part of the KSU which is a motorized contact switcher providing flashing lamp, winking lamp (hold) and interrupted ringing. The motor in the interrupter is under control of any line card in the system that seeks these services.
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