Bypass LED with switch (why)?
It is a clever way to arrange the circuit and results in a configuration that is easy to manufacture.

Consider this schematic in some more detail (I'm projecting that a TTL type interface is being used here)







simulate this circuit &ndash; Schematic created using CircuitLab

When the switch is open the LED is on and the Vf of the LED (typically 2.2V or higher) is the signal into the device logic.
When the switch is closed the LED is not lit, and the current flows through the switch to Gnd. The voltage signal into the logic is a low.   

If the LED current is set at 20mA, then the switch current will be 36mA to keep the contacts clean.