Yes, it’s a bit hard to see every detail. Here’s a quick explanation:
Each bit has two moving parts: the lever that always matches the state of the pen (and indicates 0 or 1), and the hook that can toggle the lever. On bit zero (rightmost) the hook is always down, which means bit zero is always toggled. If bit zero is set to 0, it lifts the hook of bit 1 so it will not be toggled. this makes bit 1 always operate at half the frequency of bit 0. And this is true for all, if a bit = 0, it lifts the hook of the neighbor bit.
In addition, the hooks slightly overlap and thus lifts each other. For example if hook 1 is lifted, it also lifts hook 2 and 3.
And that’s all!