VoIP works by utilising SIP trunks. The trunk connects via broadband/internet using IP packets and these packets work the same way as data packets. The voice element is contained within the data packet.
The first diagram below explains a standard PSTN (Public Service Telephone Network) connects to other phones, via a PBX (Private Branch Exchange) this would be the box that controls office based telephones.
The second diagram shows how the connection of VoIP phones and SIP trunks connected via the internet to the PSTN and our servers.