What does the Multi-Camera Record On/Off Toggle do in Premiere Pro?
The record button has three states:

Record is disabled
You're not selected on a multi-camera sequence, or you haven't enabled the Multi-camera View button, so you can't record camera cuts. (You can still change camera on a selected clip).

Record standby
If you have a clip selected, and select a different camera, the whole clip will be changed to the new camera. If you are playing a multi-camera clip, in multi-camera view and change cameras, the changes will be recorded as cuts, nothing will happen.

Record enabled
Does exactly the same as record standby, as far as I can tell.
At this point, I think the blue circle must only be there because they though it looks nice. It's like the close button on an elevator door....
The rectangles around the multi-view cameras show:
yellow - which cut is active
red - a new cut that you have just written
As soon as you stop playback, the red rectangle highlights become yellow highlights.