How to ensure that water heater is mostly on or mostly off?
I agree it's a little unclear what the right way is.

Why don't you try a test. One evening push all the pins one way, run the hot water for a bit to flush some water, then leave it overnight. In the morning if you still have hot water then the heater was on overnight. If you aren't confidant, repeat the same the next night with the pins the other way.