The external on/off slider switch and the sleepcover magnet are independent - you can use either.
The sleepcover magnet acts on the lower right corner of the screen. For this to work it's also necessary to make sure the relevant box is checked in Settings - Light, sleep & power. In case it's of interest, it's not necessary to pay the extortionate price for the 'official' sleepcover, the much cheaper ebay offerings work perfectly well - or, at least mine does (I have both).
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