a) When switch S2 is closed, the circuit is completely closed and electrical current can flow through it. The air-conditioner would turn on and W will become an electro-magnet, which then attracts Pin Q towards it.
b) When Pin Q is attracted towards iron bar W, Pin Q will no longer be in contact with Pin P and the circuit will be open. Electric current will not be able to flow through that circuit and the fan will be turned off.
c) A possible reason would be to save electricity as there is no need for a fan to be turned on when the air-conditioner is on. So when the air-conditioner is turned on, the fan will shut off so that electricity is not wasted.