On bypass the dial does nothing. It's bypassing the internal crossover.
Its a built in active crossover.
Here is how it works with out getting into to much detail (slopes, etc)
If set to low pass it will pass below the frequency the dial is set at and cut away high frequencies. Exact opposite for high pass. So if you are powering a sub you cut the high frequencies out (low pass) or if running bookshelf's you don't want sub bass playing out of them so you run a high pass. Your deftecs are full range so you don't need the crossover.
