I think you've about got it. It looks like the boom has to be resting on the trailer in order to open the grapple. when it does it locks open, and stays that way until the weight of the boom is resting on the log, when it unlocks.
The lock function works because the weight of the boom on the trailer is resting on the arm that does the locking. So the arm moves up (actually the boom drops a bit) to lock the grapple once it's fully open. Then bringing in the wench line can't close the grapple so it raises the whole boom assembly.
The unlock happens when the grapple rests on the log and releases its weight from the locking arm, which then drops down from its own weight and releases.
Very clever.