How does the 2 wire Voltage Regulator function?

[GGRider01]

I have a quick question regarding voltage regulators. Since mine doesn't have one that I can find except under the gas tank by the yoke, which I believe is strictly for the horn (correct me if I'm wrong, please).

All the wiring diagrams I see show to splice it into the yellow off the stator and ground the other wire to the frame. How does this regulate the voltage for anything connected to the yellow wire? Bear with me here on my comparison, but in my mind I see this like having a pipe with water flowing through it, then T'ing off that pipe and putting a valve on the off-shoot, trying to regulate pressure through the main stretch of pipe - it doesn't make sense!

Hopefully this makes some degree of sense and someone can clarify this for me.