The dual battery switch is the simplest and easiest to construct. It is appropriate for the boater that simply wants to "day-boat" but wants the safety of having a backup battery on board. The typical boater might be a trailer boater that wants to anchor out for the day with the stereo and other electronics running.
In this configuration, a dual battery switch is connected to the engine battery terminal, and a second battery added. This is about as simple as it gets, and is an effective setup. However, some battery management discipline must be excersized.
The typical battery management scenario consists of placing the dual battery switch in the 1 position, and running the boat for the day. The next day, switch the battery switch to the 2 position and run the boat. This alternating of the batteries daily will ensure both batterys get excersized and periodically charged.
If one battery dies when you are boating, simply move the battery switch to the other battery and continue on your way.
Note that only the battery that is in operation will be charged. The second battery will remain completely disconnected. Therefore the reasoning behind the daily alternating of the batteries is to detect if a battery is bad.
While the engine is running, it is possible to charge both batteries by placing the selector switch into the both position. And, if in the both position, both batteries will start the engine. However, the both position should only be used in an emergency, since the risk is that once the engine is shut down, if the selector switch remains in the both position, the batteries remain connected in parallel. If one battery were completely discharged or bad, the good battery would attempt to charge the discharged battery - you could end up with two discharged batteries.
Some discussion of switches are in order. If a battery becomes disconnected from the alternator while the engine is running, this open circuit can damage the alternator. For this reason, if you desire the ability to switch from battery to battery, you must obtain a switch that has "make-before-break" contacts. While most switches do, not all of them are this way, so you need to ensure the switch is of this type. A make-before-break contact makes the connection to the next position before breaking the connection of the previous position. This ensures there is always a battery connected to the alternator. Even with a make-before-break type switch, you must never turn the switch into or through the OFF position with the engine running - or you will damage the alternator.
Some switches also have a field disconnect set of contacts. This alleviates the open circuit problem by temporarily disconnecting the alternator field as the switch is rotated. However, this also requires an alternator having external field disconnect terminals, and properly wired to the switch. I do not believe this to be a common setup, and most of the time, ensuring a make-before-break switch is used (and never selecting the OFF position while the engine is running) is what is common.
Ignition proofing. Again, according to 33CFR183.410, all components within the engine compartment must be ignition proof. This term means the component is not capable of making a spark, or any spark that is generated is contained within the device. This prevents the likelyhood of an explosion in the engine compartment. Therefore, if you place the switch in the engine compartment, it must be ignition proof rated.
When locating the second battery, we again refer to our friend 33CFR183.420, which specifys how a battery must be secured. Essentially, the battery must be secured so that it not move more than one inch when a force of 90lbs is applied from any direction.
33CFR183 also states that the battery must not be located directly above or below any fuel tank, fuel filter, or fuel line fitting. In addition, any metallic fuel line within 12 inches of the battery must be shielded with dielectric material (so you don't short it out on the battery terminals, I suppose).
Finally, the battery must be fitted with insulated terminal post covers or battery box to prevent contact with the positive terminal.