i believe the red wire closest to the black wire is the power lead for the switch light. if you were to cut the splice apart(don't), and connect that red wire to power, the switch light would illuminate constantly.
it's sort of a hack way to implement an indicator light(the preference would be to wire it internally in the switch so the end user wouldn't have access to that connection), but it was not something the last owner did--he bought the assembly that way from the manufacturer..
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