There are two separate circuits in an NSS(neutral safety switch)
There is a 12volt wire that is active when key is on, this is for the reverse lights, when you shift into Reverse the switch connects the 12v wire with the wire going to reverse lights.
There is another wire from the ignition switch, it only has 12volts when Key is turned to START.
There are 1 or 2 other wires, one will go to starter relay on fender("S" terminal), 2nd wire will go to TFI module on distributor.
These 2 wires are spliced on some models so only 1 wire is on the switch.
As adsm08 said when trans is in Park or Neutral these wires will be connected thru the switch.
So when you turn the key to START, 12volts will go to the switch then to the starter relay(activating starter motor) and to the TFI module(giving 12volts to spark system).
If trans wasn't in park or neutral then 12volts would not go to starter relay or spark system.