If you look closely at your photo you can see the pressure gauge on the side of it.
This works on pressure and is usually coupled to a small pressure tank which stores a small amount of pressurized water.
When you turn the tap on, the water flows out of the tank, the pressure goes down, once the pressure reaches some set value (adjustable usually) the oump switches on an d pumps until you turn the water off, the tank pressurizes up again and the switch then turns the pump off when it reaches some defined pressure.
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Yes, that is a pressure switch which starts and stops the pump depending upon the loads. It takes care of a constant pressure, reduces peaks and can even act as a no-flow protection.