Telecasters are traditionally wired with the 2 pickups in parallel as is the Stratocaster so even when you have 2 pickups selected together both are in parallel. With this mod in position 4 the two pickups are in series meaning that when they are both on together they give more output and so a fatter tone. With position 1 being closest to the volume control the pickup combinations are:-
Switch Positions:
1: Bridge Pickup (standard Tele)
2: Bridge and Neck pickups together in Parallel (standard Tele)
3: Neck Pickup (standard Tele)
4: Bridge & Neck Pickups in Series (fatter tone than #2 and more output than 1-3)
