DS1 - 23 "phone lines" on a single cable usually attached to a "dial server" that uses digital modems for each of those 23 phone lines.
DS3 - 28 (i think, been a while) DS1s on two coaxial cables attached to a dial server, digital modems, etc.
One phone number is assigned to a "hunt group" so that an incoming call to that phone number follows a non-busy "phone line". Now remember that phone line is kinda virtual (reference TDM thread going on)
call comes in, digital modem answers, start PPP/authentication, got IP address info, rock-n-roll.
One cool thing is you can have literally 1000s of digital modems all in one rack.