Gareth,
The switch marked water heater on the PSU controls the mains electric element in the water heater.
The one showing gas in the body of the caravan just controls the gas water heating and does not need to be used when using the water heater on mains only. When useing the water heater on gas you can control the water temperature by turning the dial. When on mains electric the temperature is fixed.
You should have received a handbook with your caravan which explains the use of the water heater.Also your dealer should have gone through the operation of the water heater when he did the handover of the caravan. Sadly some dealers do not do a complete handover.My dealer Golden Castle does.
Hamer