I've been fooling with that Mic 2 Select as well. I can't find any documentation on it and all that seems to happen when I select it is whatever mic is active goes dead.
There is a test routine in the Audio screen off the Control Panel. This at least lets you know if your mic is active and working. You can also get some amusing feedback loops going with it, though I suppose how long it entertains you is a matter of what kind of medications you are taking and what your other options you have at the moment.
If anybody knows what that "Mic 2 Select" does, please post it.
By the way, a fun and free little toy for playing with the mics and any other audio inputs is Audacity. http://audacity.sorceforge.net/