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I know in modern commercial buildings, "phone" jacks are wired like data with CAT5e (or higher) cabling to a patch panel on a 19" rack. How does it work in small home with POTS?

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Traditionally in the US, residential POTS was daisy-chained via 4-wire copper cable with drops at junction boxes or sockets. Only 2 wires (red/green) were used, with 2 spares (yellow/black). All the phones were in parallel, which caused potential problems with inadequate ringer current from the central office. The easy solution was to disconnect the ringers of extension phones.

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Plain Old Telephone Service (POTS) is very robust - almost any cabling type & topology will work. But here are my recommendations:

Cable Type

I recommend using 4-pair CAT 5e cable. If you have some CAT 5 or even CAT 3 lying around it will work 100% for voice, fax and DSL. But CAT 5e gives you the greatest flexibility to reuse the cabling in the future for Gigabit Ethernet - e.g., if you want to replace POTS with VOIP. I also recommend using 4-pair cabling instead of 1 or 2 pairs. POTS service uses one pair per phone line, no matter how many extensions. Various telephone systems use 1 or more extra pairs for special features, though most modern systems need only 1 or 2 pairs for voice + signalling. Using standard 4-pair cable gives you total flexibility. Keep in mind that labor costs (whether your time or a paid installer) are normally much more than the cost of the actual cable.

Topology

POTS can be installed in daisy chain or tree topology. A daisy chain typically uses less cable. However, a tree topology with every jack having a separate cable going back to the main wiring panel, provides the most flexibility. That includes switching from POTS to VOIP and also includes changing from individual regular phones to a real phone system.

DMARC/Wiring Panel

Most homes don't use a 19" rack. Typical setups include a single set of 110 punch blocks (i.e., same as inside most CAT 3/5/5e/6 jacks) or screw terminals on up to a full "structured wiring system". In a modern setup, the phone company will normally supply one jack or other accessible termination point. Beyond that it is up to you, though with a tree topology and several jacks you will need some sort of distribution panel unless you are installing an actual phone system. The distribution panels are not "smart" in any sense like an Ethernet hub or switch - they simply connect all the lines together.

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In a small home or condominium, telephone (POTS), cable (TV/internet), and possibly other services, enter the home in a spot called the demarcation point. The associated jacks throughout the home are also wired to the same area. They can be connected various ways, usually in some kind of distribution box or media enclosure.

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