No, It simply means if your lens has vibration reduction (VR) built into it which of course does, and you want the vibration reduction mechanism to be activated while shooting, do not use the the AF-on button on your camera to focus. Instead, hold the shutter button halfway down to focus, then press the shutter button all the way down to take the picture. I have a feeling the camera u are using probably does not have an AF-on Button. If so, this does not apply to you.
What you read has nothing to do with flicking the switches on the lens. Flicking the vibration reduction switch on the lens to On, only sends power to the vibration reduction mechanism. The Vibration reduction mechanisms in the lens is activated, and moves back and forth to stabilize your image only when the shutter button is press halfway down.
The article in the link below explains VR. Make sure to check the link at the end of the article to see how it work. http://www.nikonusa.com/en/Learn-And-Explore/Article/ftlzi4s6/vibration-reduction.html
Please see the link below to find out how to test the vibration reduction of your lens to make sure it is working. http://support.nikonusa.com/app/answers/detail/a_id/15856
What is the best Nikon body for the 500mm F4 AFS VRII
I recently purchased this lens for bird photography. I like it very much. It is currently attached to a D5000 body and seems to work well. However, I am not sure I'm getting all I can from the lens while using my D5000. What would be the best Nikon body to use with this lens for bird and wildlife photograhy?