Hi this IC is a switcher and having a Mosfet switching at 136khz which have the pins 5 is Drain and 7,8 are Source... so when you powered the circuit the LED and both inductors will be powered by 136khz and by proper voltage division the LED will glow, It uses inductor to divide the voltage because It makes no loss of power, It uses high frequency because we need very low value of inductor(with resistor) to divide the voltage so very less power loss........