I get its converting, but you said:
Really nothing has changed, it's fiber in/copper out instead of copper in/copper out. The FiOS optical network terminal has POTS connections the same as a DEMARC and gets connected to the same exact way.
So why does it work one way and not the other?
Because of the key difference between providing POTS via IP and POTS via T-carrier signalling: Time.
T-carrier backbones and their equipment are very dependent on constant time-division multiplexed communication, sometimes even a separate timing unit is linked to T-carrier racks to ensure that the
frames of data being sent and received go where they're supposed to in the proper order and
at the proper time. (We're talking microseconds here...) Hence, switching is very accurate and supposed to be 99.999% reliable on a clean circuit, which means that the encoded data from things like faxes gets where it's going without distortion or loss.
VoIP systems are less constrained since they rely on
packets via TCP/IP which has retransmit and error correction built in to ensure that all the data gets where it's supposed to go, however it's not as stringent as to
when it gets there. If a packet of data (phone call, fax data, Internet, TV stream, whatever...) is lost then a request for retransmit is automatically sent but even with current data buffering technology there is potential for lost data. Someone browsing the Internet probably won't notice, TV streams may experience a smidge of tiling, but fax communications aren't nearly as tolerant. They tend to either fail altogether or users experience missing page data. Same goes for credit card machines, although the amount of data actually sent/received is much less so they aren't nearly as problematic.
My company has recently completed a conversion from our old DMS-100 switch to a new "soft" switch running VoIP. During the transition period a couple years ago, I had just finished up a month of working graveyard shifts swinging the POTS lines for mostly downtown business customers to new VoIP based equipment at the remote office,
just before the busy tourist season began. The first business day was a disaster! Proprietors were in a fit as they couldn't run credit cards for transactions, faxes of orders never made it out and alarm panels lit up like Christmas trees. I remember shaking my head as the Central Office Engineer frantically called the equipment vendor for possible solutions and our techs were back in the same office throwing lines back onto the old equipment. (Not enough testing had taken place beforehand, just going on the vendor's promises...)
The solution came finally when we were able to tie the old remote equipment to the new switch via recently tested patch codes, but it still isn't perfect. Most businesses went to newer Ethernet/Internet based card readers and although faxing is still an issue, most multifunction office printers now scan documents to .pdf forms that can be attached to e-mails. There are still holdouts clinging to their fax machines and dial-up devices, but it's safe to say that the era of traditional "modem" devices is in it's twilight.