Combination Drill Motors
In most combination drill motors, the hammer mechanism works similarly to this.
In this case, the lower jagged bit is fixed, and the upper portion rotates with the shaft. As the shaft rotates, the two plates slide against each other. The jagged edges cause the upper portion to tension a spring, storing potential energy. As they slide further, the energy in the spring is released, and the weighted shaft is driven forward (down in this illustration). This allows the tool to deliver many beats per minute, but reduces the force delivered in each beat.
This system allows the hammer mechanism to take up less space, but the limited hammer travel and weight, reduce the force delivered to the shaft. Which is why a combination drill motor will likely never fully replace hammer drills.
Hammer Drills
In a hammer drill, the hammer mechanism is almost always separate from the rotation mechanism. This allows the weight; or hammer, to be driven independently of the rotating shaft. As the shaft rotates, the weight will be driven into the end of the shaft, producing a linear force along the shaft.
This system will produce less beats per minute than a combination device, but will exert much more force per beat.
Feel the Beat
Because the hammer mechanism in a combination drill motor may have a very high frequency (beats per minute), and lower force per beat, the hammering action may be less noticeable. You'll also find that while the drill is spinning freely (not pressed against a surface), the hammer action is not engaged at all.
So to answer your question directly. Yes, it is possible to not really notice a difference between the hammer and non-hammer settings when using a combination drill motor. However, if you can't feel the hammering, the surface you're drilling probably won't either. Not all hammer mechanisms are created equal. Higher quality tools will almost always, have higher quality hammering mechanisms.
Best Answer
When the drill is used as a screwdriver, the numbers indicate the torque breaking point. Higher numbers mean more torque. By breaking point, I mean the point at which torque is no longer applied.
This feature is useful because you can limit the amount of torque that is applied to prevent screws, or the materials they are inserted in, from being stripped. When the screw is in all the way, you want the torque to stop.
When you use the drill as a drill, as opposed to a screwdriver, you set the number to the highest setting, In most drills that setting will be indicated by a picture of a drill bit rather than a number. It will be after the highest number. Some drills may also have a picture of a hammer. This indicates it has a percussive hammer action as well as drill mode.