The IN/OUT switch is controlling all the ByPass Relays on both the MIX OUT and the normal OUTPUT.
IMPORTANT :
The FAIRCHILD670 mkII is designed to let the signal go through when the unit is turned OFF.
It is like an Automatic By-Pass, thus allowing you to only turn the unit ON whenever you are ready to print some stamps or process audio.
It also prevents you from having to re-patch the signal and have interruptions.
To preserve the life of your tubes in the long run, only turn the unit on when you need to use the FAIRCHILD670 mkII and hear its magic.