The 2 to 1 multiplexer has two inputs (X1 and X2), and a single selector signal (S). All three switches (S1, S2, and S3) are set as toggle switches.
The small circles are LEDs that have been placed in the circuit so you can see the various signals present on each leg of the circuits. A red LED indicates the presence of a voltage (i.e. a binary value of 1), while a white, or clear LED, means there is not a voltage present (i.e. a binary value of 0). The LEDs are only in the circuit for testing purposes and have no affect on the logic of the circuit. The are shown here for teaching purposes only and should be deleted once the circuit is tested.
In the 2 to 1 multiplexer diagram above switches S1 and S2 are closed, and S3 is open. Therefore the multiplexer is selecting signal X1.