I don't know much about electrics... but as I understand it, the toggle switch switches between the active pickups. A four selector switch doesn't make sense to me though... seems that it should be 3 or 5 depending on the number of pickups you have on the guitar. Again - I don't have much experience or knowledge here, so I could be totally wrong. The tone knobs just control the entire tone of what ever pick up(s) are active.
Position 1 - The switch in the most downward position activates the bridge pickup only
Position 2 - The next position activates a combination of the bridge and middle pickups
Position 3 - This middle position activates only the middle pickup by itself
Position 4 - This position activates a combination of the neck and middle pickups
Position 5 - This position activates the neck pickup only
Position 1 - Activates only the neck pickup
Position 2 - Activates only the bridge pickup
Position 3 - This middle switch position activates a combination of the two pickups
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