That is how a midi-mixer works.
Think of it like this…
In you S4, there is NO AUDIO at all running through the “mixing” surface.
There is ONE audio signal, coming from your laptop, going down the usb cable, to the sound-card in your S4, and then DIRECTLY out the output in the back of your S4.
Everything that happens to the music happens INSIDE your laptop. The S4 is just a very nice controller for that software.
Now lets talk about using an external mixer.
You are now sending MULTIPLE audio sources out of Traktor.
SO, to boil it down, Traktor is acting like a whole bunch of CDJ’s, giving you control over the individual audio sources.
In the example where you are mixing two decks:
You now have TWO audio signals coming from your laptop.
One for each deck.
Your MIDI CONTROLLER, or in your case the timecode player (weather its a cdj, or a TT) is telling traktor what to do with those two audio signals…
…make then faster/slower, start/stop, jump to cue points, etc…
Soooo, all of this will be replicated on your screen.
If you move the pitch fader on your controller device, the pitch fader in traktor moves to reflect the fact that you are controlling that aspect of the software with your controller.
Now we get to MIXING.
Ok, so you have an actual, in the flesh, mixer (analogue or digital does not matter, that only refers to how the mixer handles the audio going through it).
You have now changed the output routing in Traktor from “Internal” (like in you S4 example) to “External”, because Traktor is no longer mixing the audio sources together.
This is in essence why the actions you make on your mixer will not be reflected on screen (and those controls will not even be on your traktor display, because you are not using the mixing controls in Traktor, you are using the controls on your mixer).
So, now you are sending Deck A out of one output of your sound card, and Deck B out of a second output of your sound card.
Deck A is going into input 1 of a 2 channel mixer, and Deck B is going into input 2 of the same mixer.
Now your using the mixing surface of the mixer just like you would be used too on your S4, except that all the changes you are making to the audio are happing inside the mixer, not inside Traktor.
If you want to control the various effects inside of traktor, or cue points etc. (and you dont already have a MIDI controller for controlling the decks) you are going to need some kind of secondary MIDI controller (I love my X1)… (I personally avoid using a specific mixers midi for traktor control, as that means you absolutely have to have that mixer with you to have those controls)