It will be an autotransformer. Basically, it takes one 110V winding and stacks it on top of another 110V winding. This saves materials (and money) by utilising one of the 110V windings twice. It only needs three terminals - I guess it is manufactured with four terminals for convenience of wiring. It's slightly surprising that the neutral in is labelled as the line out, but as you say, it works.
Alternatively, think of it as one 220V winding with a 110V tap.