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Ah, I see where your confusion lies. The difference you’re seeing there has to do with voltage drop.
As you said, when the cam is open, you get 120V right up to the cam. This is because we’re not looking at a closed circuit. No current can flow, and therefore there can be no voltage drop across the motor windings. Line has no way to get to neutral — its only path to neutral would be through the cam, which is why we say that the cam is switching neutral. If you were to take a measurement across the cam in this state, you would read 120V.
Conversely, when the cam is closed, all 120 volts get dropped across the motor windings. That’s why you have a blue line right after the windings, through the cam, and all the way back to neutral. If you were to take a measurement across the cam in this state, you would read 0V.