What Electro-Harmonix say:
The Signal Pad is a passive attenuator that allows you to instantly switch to a different preset volume. It's like your guitar's volume knob, with a fully-passive and colour-free circuit. Leave your amp's volume set high for overdrive, and use the Signal Pad to lower your level for a clean sound -- then switch it off to kick in your amp's natural overdrive. You can also experiment with the Signal Pad anywhere in your effects chain -- you'll bring out new tonal combinations from your favourite old pedals.