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In the „Always on“ position the switch keeps the capacitor charged all the time, meaning the Raspberry Pi will always be switched on. Pressing the On/Off button will have no effect. In „Auto“ position, the switch has no effect, and the On/Off button allows to start and shutdown the Pi. The „Always On“ position is helpful if the powerbutton plugin is not running, e.g. while you reinstall the OS on your Pi. In normal operation, set the switch to „Auto“.