Lets assume that the device is for making keytapes for cryptonets, given as master key tape for the day. Given yesterdays per-cryptonet encriphering tape, make todays per-cryptonet enciphering (and deciphering) tapes by shifting the new daily seed tape.
Lets assume that the matrix is a set of 2 submatrices that are creating (2) conditional operators. Note how, then, the conditional output of the first, nominally driven from the whitened plaintext (yesterday’s keytape, recall) controls the swap operators. Then notice how the second drives two functions: a second set of swap operators on the output AND a ripple bit flipper on the output lines (pre swap).
Ok,look at the matrix part as subkey scheduling. Look at the “non linear” transformation as an sbox. Look at the swapping and bitflipping on input and output much as the P function in DES that works with the design of the sboxes to create the right kind of virtual “wheel wiring”.
Its tempting to think of the (matrix, xor, inverse-matrix) as conjugating (computing a rod of the friredman sqaure). Its better to think of it as a unitary operator, or generator of coin flipping. Now we are in the realm of generating a quantum walker.
Interesting to see a pre-DES era design. Also note how the “parity” bit of the 5 (in DES 7) bit subkey is used.