In any case the initiating phone gets connected to a central office (CO) switch either by copper loop as in POTS or by way of the cell tower to a carrier to the CO switch. the CO switch on the calling end recieves the digits dialed and translates that to determine how to connect to the receiving phone.
The area code and 3 digit prefix tells the switch where it needs to "send" the call. Either to a conventional CO or to a cell network CO identified by the prefix as to which carrier it is. Remember that your cell phone is routinely handshaking with the cell network to let it know where your at.
The signals you here on the calling end originate at the CO you are connected to, that includes ringing, busy signal and reorder tone as well as recorded announcements like "The number you have reached is no longer in service".
The destination switch signals back to the origination switch telling it if the line is busy or if it is ringing through.
Fairly basic description-
http://en.wikipedia.org/wiki/Loop_start