Well, usually the switch in the down position is for the pickup nearest the bridge. You can usually tell which is which because the pickup near the fretboard has a deeper more full sound to it while the other one has more of a twang. (Basically the same sound you get when you click the strings with a pick. If you pick closer to the fretboard you get a full sound and if you pick down by the bridge it gets twangy.

One knob's for volume, one's for tone.

As for the coil tap... just type "what is a coil tap on a guitar?" into Google and you'll get a whole bunch of groovy technical explanations.