Why does my internet router have a “standby” button?

Before I left Vienna, the Internet stopped working in my flat. There were some major electrical engineering works going on in the building, so I assumed this was the cause. Now I've come back, they've stopped, but my Internet hasn't started working again.

The modem, from my ISP Chello, was an "ARRIS type", and the "online" light (light 2 in the following diagram) was permanently flashing.

What was the modem trying to communicate to me? On the Chello homepage it says one should turn the modem off and on if this happens. Needless to say, by the time I read that helpful advice, I'd already done that quite a few times!

But it turns out there is a button on the modem, which is marked "standby". Amazingly enough pressing this has the effect of

• making the Internet no longer work, and
• making the "online" light flash instead of being constant.

Why would one want that? How had it come to be in that state?

Anyway, pressing it resolved the problem, and freed me from the necessity of making a telephone call to Chello support.