Abhi, a very basic explanation is that the control panel is monitoring the current drawn from the zone circuit to determine the status of that zone. The end-of-line resistor draws a known current, and so the control panel recognises that if the level of current being drawn is lower than that expected to be drawn by the end-of-line resistor it displays an open-circuit fault condition. When a detector or manual call-point is operated, the level of current drawn increases above the level expected to be drawn by the end-of-line resistor and therefore the control panel will display a fire condition.
The term 'conventional' which you use, and which should more properly be called non-addressable, covers a whole range of technologies and operating systems which may operate differently from the above, but the explanation covers the basic principles of systems using a standard end-of-line resistor set-up.