AJ,
That valve is part of the system that lets some water go back to the spa for your spillover when in the Pool mode.
Not sure where else the two pipes that exit that valve go.
The valve needs to be open for the pipe out the bottom, as that is what allows the water to flow back through the blue ball valve, and then back to the spa for the spillover. I assume the pipe that goes down also feeds your pool returns.
Not sure where the pipe that exits to the left goes.. Maybe a waterfall??
Thanks,
Jim R.