An electrician needs to explain this

It’s the same concept as a rain sensor for sprinkler systems.

The water creates the circuit to drain itself. Definitely safer ways of doing this.

This little bit right here tells you everything you need to know. Is your wiring diagrams. To the left side you can see that the red and black wires are doubled up on one side of a fuse and the green and blue wires are doubled up on the other side of a fuse. The three terminals on the right side control an internal switch and you can see that it is wired up to one side of the switch and the base of the switch. This controls how the switch operates as normally open or normally closed. The diagram of the switch shows that it's connected if you connect to 1 and 3 so that would be normally closed. Since we are wired to one and two, one side and the base, we can see the switch is wired normally open.

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Talkin' electrical, 5 words max!

It looks like the red is wired to be normally open, so when the water touches it an auxiliary switch closes to turn on the pump. The blue wire only has to dangle there to create a circuit back to the black wire, which is common, using the water. When the water is no longer touching the black lead and the Blue lead at the same time, the circuit is broken and the pump stops. There might be a little bit more to it, but essentially that's what you're looking at.

Right here, what they are doing is using two phase to create three phase. The red input is on number one, a blue and green lead are doubled up on number two, and the green lead is carried over to number three. When the contactor is triggered, electricity is allowed to travel across to the red blue and black wires that are leading towards the water bucket. You also see that a black wire and a brown wire are tied to number one, which is hot, and the base of the switch. Those are probably the leads that go directly to the pump to make a run and stop.

Electrical contractor use in this application to switch on a sump pump. Used as an emergency float, if the original float on the pump doesn't work or fail. It can also be (if wired according) used to wire an alarm to let you know you have flooding by switching a light or alarm

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Nothing special. It is still more like a floating switch, but it works as a sensor switch here with 220v/25A controller (contactor)