In the “up” position shown on the schematic,soft clipping LEDs are selected.
In the middle position, no clipping diodes are selected.
In the “down” switch position soft clipping diodes are selected. With D2 installed, the clipping is asymetrical.
The clipping is considered to be “soft” because the diodes are installed in the feedback loop of the opamp. When the diodes are installed from the signal path to ground, the clipping is “hard”.
I hope this helps.