Battery Switch

We asked exactly the same questions as you when we got the boat.  Our yacht has this selector switch. 

https://seamarknunn.com/acatalog/battery-master-switch-6560.html?gclid=CjwKCAiAgeeqBhBAEiwAoDDhn4mPXG5n85Kptpw5YX5qW4YIhVzObQQ0JkNEXKbXAltW9PWSQOKTvhoCeokQAvD_BwE

 This determines which batteries are connected to the yacht’s electrics. 

So battery 1 is for the starter battery, the small one.
Battery 2 are the domestic batteries presumably wired in parallel.
1 & 2  or “Both” means that both sets of batteries are connected together.

This is the underside of the switch.

Bat 2 is the top one
Bat 1 is the right hand one
Where the 2 wires connect is the Feeder.  One wire (goes to)/(comes from) the starter then the alternator.
The other wire goes to the distribution panel.  On our yacht, it goes via a big fuse that you can see under the starboard back bed, just in front of the battery box.  (Another Hanse hidden speciality)

I think if you use a multi-meter on the resistance setting, between this fuse and the positive terminals on the batteries, you will find which switch setting connects which battery to the fuse.

If I remember it rightly?, we used to use it as 

Switch to 1 for starting
Switch to both when the engine is running, so both sets are charged.
Switch to 2 when the engine is not on so you are only using the domestic  set.
In emergency switch to both to start the engine.
Never switch to 0 if the engine is running, so always go from 1 to 2 via both

I now have a Sterling Alternator to Battery charger so that handles the charging of the 2 sets of batteries.  So now we just switch to 1 for starting and then switch to 2 for the rest of the time.

Some later boats have relays on them, but I do not know whether that had started on the 342.