A "three-way" switch is also known as a single pole double-throw switch.
Basically it connects either of two inputs (but not both at the same time, of course) to an output.
Or looking at it the other way, it connects an input to either of two outputs (but not both at the same time, of course).
If we call the terminals 1, 2, and 3, then when the switch is up, 1 is internally connected to 2; when the switch is down, 1 is internally connected to 3.
Current cannot flow through the terminal that is not connected to 1. Thus 1 is referred to as the "common" terminal and is designated with a dark colored screw.
[This message has been edited by Dspark (edited 06-13-2001).]