The pull-down and the light

A switch needs something on the other side

A switch on its own gives your pin two states: joined to VCC, or joined to nothing. Joined to nothing, a pin floats, picks up whatever is nearby, and reads HIGH or LOW at random. The 10 kΩ from SIGNAL to GND is there so that "nothing" means 0 V. That is a pull-down, and it is why this board is active high: the resistor holds LOW, and the switch overrules it with VCC.

Close the switch and follow the dashes. Current comes in at VCC, through the contacts, and splits: 0.33 mA down the 10 kΩ at 3.3 V, and about 1.3 mA down the 1 kΩ and the LED. None of it comes from your pin, which only reads the voltage. The contacts are rated at 0.1 Ω at most, so they drop well under a millivolt of it.

The light shows the switch

The LED is on SIGNAL, fed through the switch, so it lights when the contacts close and not a moment otherwise. It does not need a sketch, or even a microcontroller: VCC and GND alone are enough to see it work. When something is wrong, that splits the fault in two, which when it does not switch uses.

INPUT, not INPUT_PULLUP

The pull-down is already on the board, so the pin needs no resistor of its own: pinMode(pin, INPUT). INPUT_PULLUP adds the chip's internal pull-up, which pulls the other way against the 10 kΩ while the switch is open. On an ESP32 that lifts the open level to about 0.6 V and wastes a few tens of microamps. On an Uno, with the pull-up at the strong end of its 20 to 50 kΩ range, it reaches about 1.7 V, more than the 1.5 V the pin promises to read as LOW. INPUT_PULLDOWN on an ESP32 is harmless; it only adds a second pull-down.

Nothing while open

VCC goes to the switch and nowhere else, so while it is open the block draws nothing. That makes it a good partner for a sleeping ESP32: the pin can wake the chip on HIGH, and nothing on the block runs while it waits. Closed, it draws about 1.6 mA at 3.3 V for as long as the magnet stays, so put it where the long-lasting state is the open one.