If you touch it, the screen is now locked in the current orientation. To see the button again, simply rotate your iPhone to another 90° angle range and it'll fade in again briefly.
Works really well, maybe not so great for the small plane scenario where orientation changes all the time making the continuous fading in/out a bit annoying, but great for statically holding your iPhone at an off angle.
Even in Apples Mail and Messages app however I'd love for their to be a toggle. Texting or emailing in bed is just as frustrating as any other app doing this (should have added those to the OP).
I agree that adding in a landscape toggle is not going to be an option for everyone, there isn't much real-estate to play with on the iPhone.