Copied this from Hutch off of another thread. Explains the operation very well:
"On tractors NOT equipped with the remote hydraulic control valve (under seat) the "inside" lever, the one you describe as having the square knob, is the POSITION CONTROL lever. When there IS a remote hydraulic lever, it's left in the constant pumping position and the remote service valve is used to control the 3-point hitch. However, WITHOUT the remotes (levers under seat), that "square knob" is used to control the 3-point hitch for any functions where position control is desired. The DRAFT CONTROL lever (round knob) is left in the fully raised position while using position control. When DRAFT CONTROL is the desired function, such as when plowing, the position control lever is left in the "transport position" (mostly raised....and up against a stop tab) and the DRAFT CONTROL lever is used to raise/lower the 3-point hitch ONLY when using DRAFT CONTROL should you be using that round lever.
On SOME earlier models of the 100 series, BOTH levers had a round knob. The POSITION CONTROL lever is on the inside, nearest the seat. DRAFT CONTROL lever is closest to the fender.
There is a "draft response" control near the right heel, just above the running board. That controls the flow through the lift system. Speed of raising and lowering the hitch can be adjusted there. It's best left in the "fast" position if a remote hydraulic service valve option is installed.
The original poster describes a typical OEM Massey Ferguson remote hydraulic service valve. (under seat, between legs) When that valve is installed, the POSITION CONTROL lever is left in constant pumping position all the time. The service valve should have 2 levers. The lever on the right controls the position of the 3-point lift. The lever on the left controls flow to the remote quick couplers. DRAFT CONTROL function is still controlled by that "round knob" lever nearest the fender. Position of the 3-point hitch when NOT using the draft control is controlled only with the right hand lever on the remote service valve. You have "up", "neutral", and "down". There is no real "position control" as such. The hitch can, and usually does drift somewhat with the hitch controlled by that service valve.
So, long story short, WITHOUT a service valve, you should be using the "square knob" lever (only) for MOST of your 3-point hitch control functions, with the "round knob" lever left in the raised position. When using soil engaging implements (ie a plow) and draft control is needed, use (only) the "round knob" lever to control the hitch and leave the position control lever in the "transport position" (raised). WITH a remote service valve, ALWAYS leave the "square knob" lever in "constant pumping" position (fully raised) and control the 3-point lift with the right hand lever on the service valve under the seat. That function WILL NOT provide "position control". Draft control function will be the same as is without the service valve, using the "round knob".
Using the DRAFT CONTROL function/lever to raise heavy implements on the hitch generally results in less than stellar performance. It tends to "bob" up and down, not lift all the way through the range of motion, and not stay fully raised once lifted. Also, the weight of the implement sends a "heavy draft load" message to the draft control system, causing the lift to either try to raise, or if heavy enough, just completely dropping the load.
If you DON'T need the remote hydraulics, that valve under the seat can be easily eliminated. (using a blank plate to replace the valve) That will restore full control function to the 3-point control quadrant. (levers next to fender). The position control function of the quadrant is far above "average" for accurate position control. It will hold a mower in an exact position for hours of use with ZERO drifting." - Farmwithjunk
