Yes that is the hammer setting on your drill. The next setting is for screwing things in with no clutch release (it will keep rotating while the button is depressed), and it appears you have a series of numbers next which are the clutch settings. These will apply different amounts of screwing pressure before the clutch disengages. Good for when you don’t want to over tighten it strip screws.
Thanks for this add 100% correct, it’s for drilling not screwing!