What does the discreet part of this ciruit do

[fjb]

I've built this circuit but i'm curious as to how it works. I understand the but with the transformer isolate audio from electrical but i'b baffled by the discreet part. I inderstand the transistor is for switching the circuit in and out but why the diode across the collector emmitter and why is the voltage at the collector negative with respect to ground and what does the 2k resistor do?

http://www.supercontrol.de/cat/ft847faq/interface.jpg

Thanks and excuse the question. I only have an onc.