An FXO stands for Foreign Exchange Office which helps in receiving POTS services which come from the PSTN. FXO is the plug which is on the phone, in other words, we can say that an FXO is an interface which points to the telecommunication network device. When you connect a PBX to the Telecommunication Central Office, you plug the (FXS) lines from the phone company into FXO ports on the PBX. The FXO ports on the PBX helps you in providing the hook/off-hook indication to the local Telecommunication network.
An FXO adapter is being used when we want to connect VoIP systems like IP-PBX in a LAN environment, to regular analog telephone lines (POTS PSTN lines). An FXO adapter with the point of view of a telephone exchange is like to be a regular telephone. It is used to accept the ring signals, go on-hook and off-hook, and send and receive voice signals.