The answer is: It depends.
As SteveInMD noted: If it's a modern switch: It should
be make-before-break. Problem is: Switch contacts wear. Also, as Steve noted: If you accidentally go past "1," to "OFF,": *poof*. I accidentally did that the other day, but we were not motoring, so all that happened was we lost our instuments and so-on. My recommendation is: Don't switch the switch whilst motoring.
I plan to make things fool-proof (insofar as that's possible) by going with the Blue Sea Systems e-Series Battery Switch Dual Circuit Plus [tm]
coupled with the Xantrex Echo-Charge
Switch from "OFF" to "ON" and the starter battery's connected to the starting system--the house bank to the rest. The echo charger will ensure both get charged, regardless of switch position.