I'd imagine the switch came from a specific device where the labeling on it matches up with the behavior.
It may not be describing the "On/Off" state of the device, but perhaps a secondary function. For example, it could function as a dimmer on a lamp. Position 1 is 50%, position 2 is 75%, and "Off" means no dimming. If the switch was mounted in fixture and had "Dimmer" written above it, it would make sense.
Probably not the best example, but you get the idea.