The 'lines' settings on VoIP phones are often more confusing than necessary. In the 'old' PSTN world, a 'line' is a copper pair and is occupied by one phone call at a time. Not so with VoIP. On VoIP phones a 'line' is a username (or persona). Most phones allow for 6 to 8 simultaneous calls per username. (Also, most phones allow you to limit a username to any number of calls less than 8 down to only 1 simultaneous call.)
Therefore, with one 'line' enabled on a phone, a phone could receive up to 8 simultaneous calls before the phone will report 'busy.' When a phone is on a call and a new call comes in, you see the new call in the interface and can choose to either ignore the call, reject the call (send it to 'busy'), or place the current call on hold and answer the incoming call. The phone interface changes as the state changes.
Reasons to have multiple 'personas' on phone: You could have one phone with multiple users in order to have a 'general' user for inbound calls from the PSTN (or from a group distribution), while simultaneously having a 'personal' line for people to contact the user directly. Line 1 could be the personal line - the direct extension to the user and Line 2 could be the 'general' user. That way you can route 'general' calls differently than calls directly to the user.
Our system allows for this flexibility since we do not charge by user/extension or phone. Simply configure your additional lines with the SIP username and password of the extra users you would like to receive calls for and that's it.
See the recommended links below for more information on configuring phones and creating users.