[EdHolland]

I think the ends of the wire (possibly stripped) are clamped, one in each of the center channels, by the brass blades. The blades may even be designed to cut the insulation. You can see, at the bottom of the channels, where the plastic is slightly distorted from clamping the original wires.

It amazes me what passes in the USA for acceptable electrical practices, especially with plugs like this. I am hopelessly biased in favour of the UK 3 pin plug