It activates a higher gain mode. Since it's based on the Keeley Katana, maybe it's like the high gain mode on the Katana mini. In any case, you can see from the schem that it brings a cap in on the source of both jfets, which would make both transistors higher gain.
That said, this is different than schematics of the Katana I've seen, which have the 15n switch in in a different place (after the 220n to ground for a treble cut). I'm not sure which is correct for the original Katana. Maybe PedalPCB could chime in.