The DC position couples both the AC and DC portion of the signal, it's DC coupled. In the AC position only the AC portion is coupled. It connects a feedback integrator which acts the same as if there were a high-pass filter coupling capacitor in series with the output (there's a notation on the schematic which tells you that the HPF -3dB point is 0.5Hz). The advantage of the integrator is that you can use a high resistor to generate a low-frequency rolloff, which may not be practical with the usual LPF in series with the output.