Here's Another Great Article from Fender's Site. Enjoy!
A Classic Series Esquire model, with its single pickup concealed beneath the bridge cover.
Q: When is a pickup switch not a pickup selector switch?
A: When it’s the pickup switch on an Esquire® guitar.
Think about it: The Fender Esquire guitar model has only one pickup. So why does it have a three-position pickup switch?
Excellent question. Many of us are so accustomed to thinking of pickup switches as pickup selector switches that we might be unaware that they can in fact have other useful functions. So it is in the case of the time-honored Esquire—Fender’s original electric guitar—on which the three-position switch functions as a tone-shaping control for its single pickup. Its three settings are:
Bridge position. The pickup is routed through the volume control only, with the tone control bypassed.
Middle position. The pickup is routed through the volume and tone controls.
Neck position. The pickup is routed through the volume control and a fixed treble roll-off capacitor that produces a very dark, bass-heavy tone, with the tone control bypassed.
The three-position pickup switch was put to even greater tonal use on the Esquire’s two-pickup sibling of the early 1950s, the Telecaster®, for which it served double-duty as a true pickup selector switch and a tone-shaping switch. Then of course, before the decade was out, players such as James Burton discovered that the switch produced further gratifying tonal options when balanced in the two in-between positions, a phenomenon that also pertained to Fender’s new guitar model of 1954, the Stratocaster®.
The Esquire remains in the Fender family to this day in the form of the Classic Series ’50s Esquire and occasional Custom Shop models.