Why isn't the switches being bypassed in this triac/diac circuit?
What you're missing is you have two circuits.  Yes, the current flows from live, through the triac, through the motor, then down the white wire to neutral.

However, current also flows from live, through the capacitor (remember, it's AC we're dealing with here), through the resistors, the switch+resistor pair, and down the white wire to neutral. Some also heads off down to the triac to control it.

To make it more pictorial, you can split the circuit into two separate parts so it makes more sense:

First the main motor power circuit:


Then the triac control circuit:


Both (apart from the actual triac gate wire of course) are in parallel with each other using the same power supply.