Well, I did say it's complicated.
I don't have a diagram in front of me so some details might be fuzzy:
With ignition ON, the red wire connects to the black wire. Red comes from the MAIN 15A fuse, so now black is powered through the 15A fuse so the ignition and regulator are powered.
At the fuse block, the HEAD and TAIL fuses are fed from the black wire.
The headlight power wire from the HEAD fuse goes from there to the headlight switch group. The taillight power wire from the TAIL fuse goes back to the ignition switch. There are 2 TL (taillamp) wires on the ignition switch, TL1 and TL2. One of them (don't recall which) is the power from the TAIL fuse, with the key at ON it's connected to other TL wire actually going to the tail light, powering the lamp through the TAIL fuse.
With the key in TAIL the taillight wire is connected straight to the red MAIN fuse power wire so the lamp is on. The TL wire from the TAIL fuse is not connected, the black is not connected.
With the key OFF, there are no connections between any wires on the ignition switch.
In PARK the key will come out with the tail lamp on so your bike is more visible to traffic, and easier to find if you park in the woods at night. Some markets also have a small bulb in the headlight assembly for a front parking lamp. There's a brown wire in the headlight shell harness for just that lamp.