The starter switch in the Honda for this model is SPDT. (Single Pole/Double Throw)
It takes a single electrical voltage and routes it to one of two contacts depending on position (or throw).
In this case, it takes a black wire (switched 12v from the key switch) and routes it to either the headlight circuit or the starter solenoid circuit. The spring biases the switch position to normally have the contact for the headlight "made".
It's a small battery. And, electrical loads lower the voltage output. Prior models had a separate headlight switch, so the drain on the battery could be removed during electric start high current draw from the battery, and this helps the coils make better spark arcs at start up.
Along came the government and mandated that all motorcycles had to have the headlight on while driving about and abolished the separate headlight switch. So, Honda had a special switch made to remove headlight power during electric start up. (A tiny, high current handling one, that would still fit inside the control housing.)
The plastic that the switch housing was made from is NOT resistant to brake fluid. But, who would be concerned about that, since ALL Honda owners would notice if the brake master cylinder was leaking and have that immediately fixed, well before the fluid could reach the switch plastic, right?

In my opinion, they gave Honda owners too much credit at adhering to proper maintenance schedules and attention. It really should be able to withstand owner abuse and neglect far better than it does, and also withstand shotgun blasts from close range without showing any damage or deterioration.
But, those bastard engineers at Honda overlooked that eventuality. Honda should have extended the full maintenance warranty to 50 years 500,000 miles.
Probably the biggest fault in Honda engineering is in not creating a product where ham-handed mechanic/engineer wannabes are prevented from attacking with malice.
But, your switch, for whatever reason, is now broken. Your choices are:
-Replace it with a new one from Honda that demonstrated it's ability to last "only" 30 years.
-Ignore the current loads and hard wire the headlight to always on. Then use a simple SPST switch in the starter solenoid circuit.
-Use a SPST switch in the starter solenoid circuit, and add another neato switch "with lighted bat handles" in another position on the bike.
(Be sure to make a one-off wire diagram for your bike to make troubleshooting possible 30 years after the mod was made. Don't want to be cursed by future owners, for poor engineering decisions, right?)
BTW, switch contacts are rated for power handling. The headlight circuit must make and break 10 amps without meltdown (safe engineering practice). The starter solenoid circuit probably needs only 3-5 amp (maybe less) make/break contact capability.
You could eliminate pesky switches entirely, and just touch and/or twist open end wires together whenever needed. But, I'm not sure how to make that sort of schematic representation, on the amended wire diagram.
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...Where IS that tongue in cheek emoticon?
