The plug nozzle looks from the outside like a normal engine bell, as used on most rocket engines. Inside, however, there is a "plug" (referred to as the centerbody) that can seal off the exit from the combustion chamber above it. It is similar in form to a sink turned upside down, with the exhaust from the combustion chamber coming out the drain, past the plug (stopper), and into the bell (bowl).
The key to the plug system is to use a bell designed for high altitude use. In a normal nozzle this would result in the ambient air pressure forcing the exhaust in from the walls of the bell, leading to a loss of thrust. However in this situation the plug is "closed" by moving it closer to the combustion chamber, and the exhaust is forced out from the plug to the sides of the bell again.
Two similar designs, the reverse-flow and horizontal-flow, squeeze the flow between two complete bells which are moved in relation to each other. The existence of three such designs, along with the similar aerospike, has led to all such designs becoming known as radial out-flow nozzles.
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