Shakey

Yup, thats it

the contactor is just a coil, with an armature connected to it. When you energise the coil, the magnetic field around it attracts the armature, this pulls in the sets of contacts

it is normal practice to have a N/O on (or start) switch in series with a N/C off (or stop switch), in series with the coil

you then wire a set of N/O auxilliary contacts on the contactor in parralel with the on switch, which act as the hold on.

So when you press on, the coil energises and closes the contactor, the N/O contacts close and short out the on push, keeping the contactor energised. The contacts can be used for any circuit, within their current rating

This system is used because if you were to lose power, the contactor would drop out, and would not re-energise until the 'on' push is pressed again.

If you were to use a straightforward toggle switch, for example, the contactor would re-energise when power was restored. And the person working on the motor (for example) which would suddenly restart would NOT be impressed!!!!