Generally, the three positions for bilge switches are thus:
- Automatic (pump is normally off, but will be activated by a float switch in the bilge or on the pump itself if the water reaches a certain level)
- Off (pump won't activate under any circumstances)
-  Manual operation (usually spring loaded momentary contact) that operates the pump as long as you hold the switch in that position. 
Something like this:

 
The "auto" position is what you should want your switch to be on normally, so that the pump is activated by the float switch in the bilge.  If the switch positions are not labelled, you can experiment to figure out what they are:
 Open your bilge hatch and look for a float switch, and lift the floating arm.  Should look something like this:

That should start the pump operating; if not, experiment by moving the panel switch to the other fixed position and test it again. 

If you don't see a float switch (there could be an internal switch in the pump), you could try dumping a bucket of water in the bilge and see if that activates the pump; if it doesn't move the switch to the other fixed position and see if it the pump now activates on its own. (If it still doesn't go on, you have a problem that needs to be fixed right away). 

Once you've figured out what the positions of the switch do, put a label on it, hopefully with large enough letters so that not only you know what is what, but also anyone else on the boat in case of an emergency. 

We have two automatic bilge pumps on our boat (a small primary one and a bigger secondary pump just in case the first pump craps out or we have a more serious water problem), and I make it a habit to check both of the float switches when I'm leaving the boat for a while unattended, just to make sure the 2 pumps are working OK.  I find its not all that infrequent that one of the pumps in fact isn't sucking properly (or at all) because of some junk its pulled into the intake screen from the bilge, so my paranoia in this regard is not unjustified (I won't address my other paranoias!).   You might want to take a look at the system that Tom Soko did on his former boat which is pretty much the set-up I copied: https://www.catalina36.org/members/technical/upgrades/adding-second-bilg...