First thing to keep in mind is that these are not contacts and coils. These are computer instructions that tell the processor to check the status of a bit and write a bit to a memory location. Once a bit is written, it stays that way until a new value is written.
A tag is a pointer to a location in memory. Think of it like this: You tell your friend there will be a party at Bob's house. Bob's house has an address, a location on a street in a city, but you and your friend don't know the house number of Bob's house, but both of you do know where Bob's house is, so all you need to tell your friend is that the party is at Bobs house. A tag is kind of like that. ONE_SECOND is a tag and all the programs "know" where the value for the tag is located in memory, but you don't need to know the exact address, you just know ONE_SECOND
Because the rung is in a periodic task it does not execute continuously. The rung is scanned only once every half second. When it is first scanned the value in memory at the bit location we named ONE_SECOND is 0. Therfore the first instruction of the rung, XIO ONE_SECOND evaluates as true. Its the only condition instruction on the rung so the rung is ture and the OTE now writes a 1 into the memory spot pointed to by the tag ONE_SECOND. Then the subroutine exits. Since nothing else is writing a value to the tag ONE_SECOND the 1 stays in that place in memory. Then a half second later the task runs again. Now when it evaluates XIO ONE_SECOND it will see that the value in the memory location ONE_SECOND is a 1, so the instruction will be false, the rung will be false, and the OTE ONE_SECOND will now write a 0 into the memory location pointed to by the tag ONE_SECOND. That 0 will stay there until the task executes again.
I hope that helps.