The lever operates the magazine cut-off. Open the bolt and look inside the magazine (where the cartridges are presented to the bolt) and you can see the cut-off shaft in action as you flip the lever.

The front sight blade is held in place with a small pin and can be replaced after driving the pin out. It's reasonably easy to make a sight blade of any height you choose from sheet steel, with no more tools than a hacksaw and file.