Thank you for all the responses so far
Just to give you a quick example of what we use the multitap for in 1 player 2 controller speedruns:
- Talking to an NPC normally locks your character into place
- But talking with the 3rd controller, then deactivating the multitap with the switch reassigns that character to be AI controlled and I can just walk during the cutscene and mash through the textbox with L/R
Just to make sure you guys understand what I mean: It's not technically unplugging the 3rd controller. Unplugging does not do anything. It's specifically deactivating the multitap-switch on the device that forces this reaction.
What I -think- it does is, it sends the SNES a signal that says, that more than just one controller is going to be connected. Specifically that signal is activated/deactivated when I flip the switch on that device. This prompts the game to check whether there is a 3rd controller active, and disables it if that's the case.
You can actually test this behavior on SNES9x emulator. Set the: "Config -> Controls -> Use Super Multitap (5-player)" in the emulator. Get a 2nd character in the game and press START on the 3rd controller (a small  will show up on the characters portrait). Then you just go into the SNES9X menu and set "Config -> Controls -> Use SNES joypad(s)". The 2nd character will instantly be back in AI control. Note, the little  in the character portrait will only disappear on screen change