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It cuts off fuel flow at the injection pump via a vacuum shutoff actuator (one of its names).
There is a vacuum line that enters the cabin through the firewall and travels under the dash to the ignition. It is the vacuum "feed" for the shutoff mechanism. When you turn the key to "OFF" the ignition passes vacuum from this feed out a vacuum line that goes back out in to the engine bay and connects to said actuator. I don't remember if this actuator pushes, or pulls, but it actuators a lever inside the pump that cuts off fuel.
It's the same movement as is made by the "STOP" lever on top of the valve cover.
It's why a bad vacuum leak in the system leads to no or slow shutdown.
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