From my reading, it only operates while you're actually having a conversation on the phone (i.e. after you've picked up the call). It then switches to the main speakers (rather than just the earpiece speaker) when you open the keyboard, and back again when the keyboard is closed. This allows you to easily look things up on the phone in the middle of a conversation. As dof250 says, having it triggered by the proximity sensor might make more sense, but it sounds like that option will be coming in a future release.