The photo shows the "magic wand", i.e. a pencil with a magnet attached to the end. That is how to turn on the power inside your locomotive. Wave it over the reed switch inside the locomotive to turn it on. I have also implemented a similar reed switch in my installations to use the wand to turn the power off. Update: the latest version of the BPS circuit board now comes with both installed.
Battery power should normally be turned off when you are not using your locomotive (e.g. at the end of an operating session). The battery can hold its power for many months (my personal experience).
If you have completely dead rail, you need to wave a magnet over the reed switch that is installed in the BPS circuit board to turn the power on. You usually mount that board near the top or side of the engine, so that it is within 1/2" of where the magnet can trigger it. If you have track power, the BPS in the engine will automatically turn it on, as soon as at least 6 volts of AC, DC, or DCC power is detected. Even a 9-volt battery briefly touched to the rails will turn the unit on.
To turn off the battery power, first remove all power from the rails that the locomotive sits on (if applicable), and then turn off the battery power via the BPS. With the Soundtraxx Tsunami decoder, pressing F5 on the throttle turns the power off. With the new NCE "Dead Rail" decoder, that same functionality is now available for non-sound decoders.
Since I have an older version of the NCE decoder, I have simply installed a second reed switch (identical to those on the BPS board; see the link below) that I wave the magnet over to turn off the power to the battery.
(external link: Digi-key #HE549CT-ND)