Older systems used to have a redundancy built into the wiring, 2 wires would go in and out of all of the devices and then return to the panel, this used to be called class "A" wiring (NFPA now refers to this as Style D or Style Z wiring).
Most current alarm systems use a resistor after or at the last device on a 2-wire circuit. (Class "B" wiring, or Style B and Style Y wiring under the newer NFPA 72.) The control panel or control device on an addressable system is constantly looking for that resistance as a "normal" condition. Conventional Smoke detectors, for example, will lower this resistance when activated to a point below the alarm threshold and place the panel in alarm. Pull stations and most heat detectors will short the circuit (in the U.S.) also creating an alarm (a short is basically zero resistance, although the wire itself offers a small amount).
If a wire connection is loose or is cut, the panel or device stops "seeing" the resistor and enters a fault or trouble condition. Normally, this is then looked into by a maintenance man or authorized service company.
The purpose of End Of Line Resistance's is to allow the control panel to supervise the field wiring for open or short circuit conditions. It should be installed at the last device on the loop, electrically speaking, and not inside the control, unless special conditions are met.
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