Hi Erick. On my car, the rear lights do come on when I turn the switch to one of the left positions, in turn (i.e. one click to the left is the right light, two clicks the left one). I converted to euro lights a few years back, but still need to put in these small lights in the housing to see whether they work.
What these lights are actually for: in Europe, streets can be narrow. When parking on a narrow street, you want to make sure that traffic can see you car parked, particularly if it's the first car to be parked in a row. So this switch allowd you to turn on a parking light on one side only (the street, rather than the sidewalk, side) that's very low wattage so it won't drain the battery.
Nowadays, it's rare to see a Pagoda parked this way of course - they usually are parked in a garage at night. However, one summer evening in 1994 I saw one parked in Zurich (Switzerland), outside a cafe terras, top-down and it looked so good that I am sure this is a major reason why I own my Pagoda today.
Cees Klumper in Amsterdam
'69 white 280 SL automatic