It's a series/parallel switch (usually a push/pull pot). It drops the output and leans the tone up a bit. It makes a humbucker sound more Tele-ish. You can have independent switches for each pickup (I have that on my Suhr JM) or you can have a master switch for both pickups.
With certain guitars/rigs, I like it for clean stuff. For dirty tones, I'm with you...I just roll back the volume knob. For clean stuff, I find it gives a humbucker some characteristics of a singlecoil, but without the drastic volume dip and tone shift of coil tapping. I mainly like it with hotter pickups. Sometimes if you coil-tap a humbucker that's wound hot, I've found that the result is a tone that just sounds kind of like an anemic version of that humbucker. It's nothing that makes me go, "Oh, that sounds like a great Strat now".
The parallel thing can also be handy if you're running something Marshally with Greenbacks or GB style speakers that can get a little bloated in the lows for clean tones at higher volumes. The parallel thing just seems to decongest things and lets me switch between HSS, HH and HSH guitars without having to reach for my amp's EQ at a gig. When running higher efficiency speakers like V30 and something like a Boogie, if I'm just using humbuckers all night I don't really use it as much. I can dial in plenty of sparkle and clarity with the full humbucker.