The equipment in question is a bypass humidifier. It's used to increase the relative humidity of indoor air in the winter. During other seasons, it should be isolated with the bypass damper closed (it looks like it is) and the valve on the water line supplying water to the humidifier closed, too.

The first thing you should do is buy a humidity and temperature gauge. That will tell you if the humidifier is doing anything. In the winter most people are comfortable with the humidity 40-45% at 70-72 degrees. This type of humidifier can only add humidity when the furnace is operating. If the house is very dry and the furnace runs in short cycles, then the humidifier probably can't supply enough moisture to raise the humidity above 40%. Youi will have to monitor this during the heating season.