The design of the switch is for finding the optimal tone for your guitar.
For example in one position (bright) it would be useful for a Les Paul and in the other position perhaps a Strat or Tele.
That said you may want to investigate a build issue if it is so far to the extreme. Also it is to work in conjunction with the tone control so if you have that set high and you go to the LP setting it will be much more harsh. Especially if using a Bright guitar and amp setting.