Update
I stopped by the dealership I purchased my ATV from and asked them about the key positions. The third spot is nothing more than another "OFF" position. Odd that the Owner's Manual did not explain that. In any case, the mystery has been solved.
On a side note - I have been super impressed with my local CFMOTO Dealership. They always take the time to talk to me and answer questions, and in my book, that goes a long way and speaks to the integrity of the dealership. I had a few other questions about my machine and the parts/mechanic guy brought me out to a similar machine and showed/explained everything.