No it is not an "on" button. It is a button that takes you directly to the Xbox live user interface at anypoint; in-game or not. There is however, an "on/off" button on the optional remote for DVD playback.
Why are you all assuming that this is about the Xbox 360? If you look at the ps3 controller, there is a PS logo in the middle. I would hope that you could turn the system on and off from the controller also.