By pinching the line momentarily, they are cutting the flow of fuel to the carburetor.

As every engine should be run on the reach side at full rpm's, when they pinch the line, the mix tends to go to lean.
Leaner mix induces an increment in rpm's.
Too lean mix induces the engine to stop.

They try to hear a little increment in rpm's just before the engine starts dying.
That indicates that the mix is a little rich at full rpm's, as it should be to protect the lubrication of the engine.

Some good reading here:

http://www.hooked-on-rc-airplanes.co...ning-tips.html

http://www.*********.org/cars_eng-tuning.htm

http://www.rcuniverse.com/forum/m_88...tm.htm#8841395