Here we are converting decimal to binary.

When the 1 button is pushed, D1 is forward biased and the least significant bit goes high.
D4 is reverse biased and blocks the + 5 volts from the other lines.

When the 2 button is pushed, D2 conducts and takes the middle bit high.
D3 again blocks the + 5 volts.

When button 3 is pushed, D3 and D4 conduct and take the two lower bits high.

With three lines you can have the binary numbers 000 to111 (decimal 0 to 7) encoded.