I think the city/fresh water valve just connects the pressure side of the plumbing, shared by the pump and the city water inlet, directly to the fresh water tank; if it were up to me, I'd label it as a fill valve. It makes sense that with it open (i.e. fresh water setting) and set up otherwise for winterizing that the pump would pull from the antifreeze jug and dispense the fluid into the tank. Similarly, if you're operating from the internal tank only, putting it on fresh water would cause the pump to operate continually, circulating water from the fresh water tank back into the same tank.
If that's how things are set up, it does mean you can use the pump to (fairly slowly) fill the fresh water tank from a container--just do what you were doing when trying to winterize, but with water instead of antifreeze. In some occasional situations that can be a handy option to have available.