You set it manually to the current tool and then you can check Persistent Tool Selection in General Config and Mach will remember the last tool on a restart. You can add a second switch for homing when you power up the machine.
Of course 4 switches on an 8 position turret would be better as Mach would always know the tool in position, but it's more complex too and requires 4 inputs, although you could even do it with only 3 switches.
Dan