Explanation: By turning this switch you turn the automatic focus on (position AF) or off (position M for „manual focus“).
When focusing manually you have to use the distance ring at your lens and the D7000 will show a green dot in the viewfinder if it considers your focus to be correct.
You can release the shutter anytime, regardless of how you have set the focus.
Tips: Use AF. M is for rare cases where the autofocus does not work or for so called „pre-focusing“: Well before taking a picture you focus on a certain point and switch to M. Doing so you can keep the focus and release the shutter any time without any delay because of the autofocus.