Actually, Jeff, while you're mostly correct, the 2229 isn't a closed system like most canisters, in the sense that it's closed to the atmosphere. That little third tube, the breather tube, is open to the air (to allow air intake while the filter fills and empties). If it's dropped below the tank level, it will drain the tank to that level. Try it... you'll see. (Don't really do this unless you want water on your floor.)
I agree that the 2229 is rather mysterious in how exactly it works. I suspect it constantly drains thru the intake tube at some rather slow rate. When the canister fills, it overflows into the tube with that foam float. When the float chamber is completely full, the pump is activated and pumps water out of the canister faster than it can be let in. It is a very ingenious design, no?
Jim