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Interesting, so this is why the phone line still worked when power was out across the whole town.

Yeah, it used to be that you could still make calls (particularly to emergency services) even in complete power outages, for as long as your local exchange has batteries for. (AFAIR that tended to be on the order of hours, but probably differs quite a bit across locations and regulatory domains/countries.)

Another thing we lost in the age of VoIP landlines, but then again mobile towers also have batteries. Just don't be unlucky and have a power outage with 3% battery on your phone...

Luckily, phone batteries and phone power consumption seem to have improved a lot in the last half-decade.

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