In most cases the deafness caused by otosclerosis is what is called a conductive deafness.  This is where the inner ear is working fine but there is a failure of the sound waves being conducted to the inner ear.  Otosclerosis is only one of the causes for a conductive hearing loss.

It can also be caused by:
1: anything that blocks the ear canal eg wax
2: a hole in the ear drum (perforation)
3: fluid in the middle ear (glue ear)

Occasionally otosclerosis can also damage the functioning of the inner ear and cause a sensorineural deafness.  This is where the fault is not in the conduction of sound to the inner ear but rather a failure of the inner ear to convert the sound waves into nerve impulses.