Im not going to mention what DSLAM stands for again, and instead i am going to show what role it plays in DSL connectivity. And now, some ASCII art
Local Loop
_________________|___________________
| |
_________
SNI | |
| | |
| | |
/--\| _ ______ | |
| |] | | | | | |
| |____| |____| |_____| |
---------------------------------------
^ ^ ^ ^ Central Office
| | |-- Crossbox
| |----Pedastal
|-- Customer Premise
The DSLAM is a piece of equipment that sits in the Central Office. Next on to the anatomy of the central office.
_________________________________
| | |
| ATM Edge Switch-> | |
| | |
|_____ |________|
| | | |
| | <- Voice Switch | |
| | _________|__ |
|_____| |ATU-C -> || | |
| | DSLAM -> | __|| | |
| | | | | |
| | | | | |
| | Lim Port --|---> || | |
__|_|_|_____________|_____|| | |
Ok, my poopy ASCII art out of the way, I am gonna talk through this. The local loop, as I have had it explained to me is a pair of copper wires that runs between the SNI and the CO (Central Office). When the pair hits the CO, voice traffic is routed to a voice switch, while DSL traffic heads for the DSLAM. The first hit it makes in the DSLAM (usually) is a LIM port. From the LIM port, it gets sent to an ATU-C. The ATU-C converts the signal into ATM cells, which then get sent to the ATM Edge Switch. The signal then gets sent through a myriad of switches referred to as the ATM Cloud. Then the signal hits the ISP, and goes out to the internet. Reverse for downstream.
My simplified drawing shows a DSLAM with one lim port and one ATU-C. In reality there are racks of LIM ports and ATU-Cs. That's where the multiplexer part comes in. The DSLAM takes a bunch of DSL signals, converts them into ATM cells, and sends it off to the Edge Switch.
The DSLAM I work with is a Cisco 6100. I also work with Lucent DSLAMs, though only rarely. We refer to the Lucent ones as stingers, and they are typically used to extend DSL availibility. The main difference between the two is the Ciscos are typically in the CO, while the Lucents are out in the field.
Another point worth mentioning is that it is possible to chain muliple DSLAMs together. The process is called subtending and allows a DSL provider to allow more DSL connections through a CO | 
