The switch sending a signal to the engine makes more sense. Thanks for setting me straight. My perspective is from a US car perspective where the engine and transmission are controlled by the same computer.

Therefore as I understand the concept - the plunger in the transmission is actuated by pressure associated with impending up-shift, bridging the poles on the switch (closing the switch), allowing a signal to pass to the engine management computer to cause the timing to retard.... what a mouthful.

As for "these switches don't leak" - not in my experience. The switch on my car was leaking between the plastic center and the metal housing - no leak at the attachment point to the tranny.

New switch with small o-ring and 10 minutes to R&R and no more leaks.