Ah, now I see what is confusing you. The plunger knife does not separate the bales, it separates the hay in the bale chamber and about to be compressed from the hay that has not yet been stuffed into the bale chamber by the wadboard. The bale is made up of a series of about 15 slices, each one made by the rearward push of the plunger.
Standing at the back of the baler looking forward, the right had side of each bale will be cut by the plunger knife, one cut per slice. You can see the cuts on the side of the bales. The knife sits vertically on the rear right edge of the plunger, facing the rear. The shear plate is also vertical, on the rear edge of the feed opening.
On the left side of the bales the hay is tucked into itself.
When you cut open a bale it separates into the slices. A modern baler might make a good bale with fewer slices, but yours will likely need more slices, hence my suggestion of 15. When the knotters are tripped, the twine needles that sit under the bale chamber are pulled through the chamber to carry the twine up to the knotters to be tied. They are protected from the compressed hay by slots in the face of the plunger while it is compressing the hay. All this happens in a fraction of a second. The needles lay the string for the front of the old bale on their way up and the string for the rear of the new bale on their way down.
Roger