The switch disengages the clutch mechanism and releases the spring tension to allow for easy wheel changes. Technically this is the sole purpose of the lever and Shimano designed it simply as engage/ disengage switch and that the clutch cover had to be removed to adjust tension.
In reality riders have discovered the lever works for simple tension tuning. You can set the switch any where between soft and hard, it isn't an on and off, so you can make small adjustments to the tightness for smooth changes using the lever. If you want to increase the tension past the tightest point on the lever you need to adjust the clutch inside the clutch housing.