for each individual pickup, it turns them on and off I would believe.
1965 Fender Mustang not a RI
Squier Vintage Modified Jazz Bass

Peavey Classic 50
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If they're 2 way switches, they're on/off for each pickup. If they're 3 way, then you've probably got on/off and reverse phase for the single coils; an on/off and one of a few different options for the humbucker.
Yes! I love that setup. Gives you more tonal options than you get with a standard 5-way switch. Back in the day when I used to play strats, this was the first mod I made to them. I would install 2-way toggle switches for the single coil pickups, and 3-way toggele for humbuckers so I could toggle between single coil and humbucker mode.
Guitars: Custom Lado Earth 2000-3, Custom ESP Explorer, BC Rich KKV, Gibson LP Studio, Greco SG, El Degas Stratocaster, Agile AL-3000, LTD EX-351

Rig:Marshall JVM410H + Marshall 1960A, Boss Noise Suppressor