This is a bit of an oversimplification, but there's a number of checks that happen when you check for device updates. Let's just boil them down to:
1. Zune software checks to see if there's updates available for your phone model
2. Zune software then checks to see if your particular phone is approved for the update (the updates are staggered, through some criteria that I don't know).
The disconnect trick relies on you pulling the plug in between those two checks, so that the Zune software sees that there's updates available for your phone model, but when it goes to check to see if your particular phone is approved, it can't hit the server to check. When that second check fails, it fails in such a way that it assumes your phone is approved for the updates, so you get them. Presumably this prevents someone from being trapped in a situation where they can't ever update because they can't reach the update approval server.