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As with all oscillators the idea is to replenish thr losses of the tank circuit at a very precise moment. A positive feedback basically means that the input will follow the output, at the same phase shift. So the transformer's secondary here is wired in antiphase which gives a 180 degrees phase shift to base, and the the output is taken from the collector which gives another 180 degrees phase shift, totalling in a full 360 degrees positive feedback, which is essential for all oscillators. The tank circuit at the output, sets the oscillation frequency and restores the sinewave almost completely. The only distortion is when it hits the low end of its swing, but the distortion is so low, that a single one order filtering will clear it out.
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