Problems understanding a MOSFET Switch
It's a logic level translator. When drain is high Vgs is 0V. The gate is high (3.3V) and the source is pulled high via R25 to 3.3V. When drain is low, the source will also be pulled low by the internal body diode of the MOSFET. As the diode pulls the source low, the MOSFET will turn on (Vgs increases) and ground the source even better. MOSFETs doesn't really care which direction the current flow goes as long as the Vgs threshold is reached. 

If needed, the effect of the body diode always conducting in one direction, can be circumvented by placing two MOSFETs "back to back" with their diodes in opposite directions.