I'll do the water heater question first. That switch enables the propane heating circuit for the water heater. I believe that model of FunFinder came with a Suburban water heater and the 110v switch on the Suburban is a small rocker switch located on the back of the water heater behind the outside cover plate. Not very easy to get to and if you do use it, it is easy to forget it is on and very easy to burn the element up by accidently plugging in the trailer with an empty tank. The electric element will go "poof" almost instantly if the tank is empty. I've never used the electric element in any of my RVs. Many do, but, I've never had the need or the desire. I use the LP and only turn the tank on when I need hot water. 10 or 15 minutes and the water is hot, turn it off and the water will easily stay hot for 8 to 10 hours. I usually fire it when I wake up and then again at night to do the dishes; two times per day for about 10-15 minutes per time, very little propane usage and I don't need the electric element.
During the camping season, you can leave the battery hooked up if you go out at least once per month or you could add a Battery Tender/Minder and use that in the interim times. At the end of the season, unless you use a Battery Tender/Minder, I would definitely remove the battery from the system, either physically, pull the fuse, pull the cable or use the disconnect. I know they (CruiserRV) started putting the disconnects in some of their rigs in late '07 and by the '08 model year, IIRC, they all came with them, so, your '07, quite likely doesn't have a disconnect switch.
I'd put a Battery Minder on the system:
Battery Minder Plus
The Battery Minder Plus is the unit I use for most all of my equipment; tractors, ATVs, mowers, generator, etc., anything with a batter in it that is used infrequently. I've got about 9 of them spread around the farm. I used to use them on my two antique cars, but, have since gone to a different type/brand for them; this one can handle multiple batteries from a single unit (up to 5 with the right base unit) and does an even better job:
Pulse Tech Battery Maintenance System
I don't use one on my RV, though, not because it doesn't need it, but, I have shore power (50 amps) provided to the trailer at home and it stays plugged in year round when at home.
An aside to others that may read this... Even if you have a battery disconnect, you need to be a little careful. Not all battery disconnects are 100% effective in their "disconnect". For instance, many trailers, even though the disconnect is thrown, will still provide power to things like the propane leak detector and even the stereo unit (look to see if the panel is still lit...). Some RV's, like my Cougar, even with the disconnect in the off mode, still have power to not only those, but, the remote control panel and everything that it operates. My Cougar will still power out the slides (all 3 of them), turn on the outside lights, the scare lights and the docking lights along with the propane detector and the stereo unit. Not much of a disconnect after all
Just don't "assume" that your disconnect actually disconnects all
of the load off the battery when in the off position...that's why I recommend a Battery Minder Plus, even with a disconnect, to make sure your battery is at 100% of efficiency when you need it.