The big 1/2 switch is speed. Generally softer materials get higher speeds, and harder materials get lower speeds.
The dial is for torque limiting. If you don’t want to screw something too tight, you can turn the ring to a low value. This can help avoid overtightening or stripping out screws. The clutch will slip at a certain torque, make an awful sound, and stop driving. If the screw doesn’t go in all the way, turn it one or two spots higher and try again.
The torque limiter usually also has a drill setting. That means no torque limiting, and you should use it for drilling. If you don’t see one explicitly labeled, just twist the ring to the highest possible setting.
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