Your no 2 reveals that to be a palm switch - it cycles between at least two different settings of the reeds.

It sounds like the box is a reasonable quality one.

I forgot to ask if the exterior of the instrument is plastic or wood/metal ends, and do you know roughly how old it is - was it acquired new or second hand by your grandmother and did she play it herself.

Some of us have an affection for old things - rapidly achieving that status ourselves... :-)

Robin