Ross, let me try to answer the questions.
The black dot is covered by the red dot (or becomes the red dot) when the power is on.
I'm not sure what the internal optical/electronic mechanism is, but the effect is that it is like a conventional red dot sight when the power is on, and when the power is turned off, the black dot appears in place of the red dot. The red dot is visible in bright sunlight, although the black dot would naturally work better under bright sunlight conditions.
In conclusion, I'd like to admit that the PK-AS sight is my favorite among AK scopes and sights.