A phone basically consists of a switch, a speaker and a microphone. A hook switch is used to connect and disconnect it from the network. It connects when you lift the handset. A speaker is generally a 8-ohm speaker. A microphone in the past is as simple as carbon granules compressed between two thin metal plates. Sound waves from your voice compress and decompress the granules, changing the resistance of the granules and modulating the current flowing through it.
There are many projects that one can experiment with it. However, please check with the regulatory body of your country to ensure that what you are doing is legal and allowed by the regulator.
Telephone In Use Indicator Project
This is a telephone in use indicator project that uses 13 parts to build. Yellow LED ON indicates line in use and green LED ON indicates that line is not in use.