Obvious the work of a Super Genius, understandable only to a rare few.
Wyle E Coyote is my hero. 
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My guess is we are not looking at a device that shuts the water off. Notice the main supply is larger than the bypass. When the valve is open, water flows freely through the larger pipe and some through the bypass. When the valve is closed, water is forced through the bypass, reducing the volume of water but beyond that, no idea why this would be needed.
Okay, if we want to take all the fun out of it...
I had opportunity to show the pic to an old plumber today. Surprisingly, he didn't think it was nearly as funny as I did. He said that it's a bypass loop for a pressure regulator valve (that was never installed).
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I showed the pic to a young plumber today and he said it looked like something an old plumber would do, and then he laughed hysterically.
So there.
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Now that you're saying it, it makes good sense. More specifically, it is a back-pressure bypass loop for a PRV (that was probably installed and later removed). Without the bypass sweated joints are potentially subject to additional stress.
I guess these days expansion tanks are used for the same purpose.
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You're killing this for me, you know that, right?
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young plumber
Ask him how many lead joints he has caulked. Or ask him to produce some oakum from his truck. If he has oakum or -better yet, yarning tools- move him to the top of your list.
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My houses are all PEX and flex stainless hose. Couldn't use oakum even if I had any anymore.
Well, maybe on a drain... But I don't have any lead around either so I would be screwed either way. Lol
all PEX and flex stainless hose
Add cpvc here. Still, I'll loan you my firepot & yarning tools if you need them. But you can't have my lead bars.
I've never actually done it myself with oakum and lead, although I've watched someone do it a few different times early in my career.
When I first saw them packing the oakum in, I thought they were pranking me. But, no... It worked great after the lead cooled.
It's a real art. Fascinating to watch!
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This is the lounge, so what the hell...
When you absolutely, totally want something to stay together -you lead that joint. Doesn't have to be plumbing.
See this pier? It was put in harms way to survive hurricanes. I sold the ACE some of the materials to lead the railings into wells in the pier. AFAIK, it hasn't failed through an untold number of hurricanes and violent nor'easters since the 70s.
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When you absolutely, totally want something to stay together, you weld.
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Sadly, longingly, GOOD welding is not in my skillset.
I'm sure you'd do better than this fine example I found:
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Whoever did that is NOT a welder. They’re a dirt dauber. 
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