Hemi has got it just right, the only function of the thermostat is to regulate the flow of coolant to the radiator to maintain the engine at optimum operating temperature, and to do this it is constantly moving in an analogue fashion to be slightly more open or closed within its movement range as engine heat output, vehicle speed and ambient temperature change. It does not move bang-bang between fully open or fully closed.
Any issues about which path the coolant takes through the engine have to be solved at the design and prototype stage by altering the resistance of the various paths so that balanced and even cooling is achieved throughout the engine block, whether the coolant is flowing through the radiator or recirculating.
As far as thermostats being only either "open" or "closed" as per the original question by thruthefence, this is a common misconception which I think probably stems from the experience that probably all of us have of testing a thermostat by sticking it in a pan on the stove and heating it up to see that it opens. Because it is being heated from cold to near boiling quite quickly, the thermostat does suddenly go from closed to open, which gives us the view that this is how they work.
But if we were able to vary the temperature in the pan accurately within the thermostat's operating temperature range of a few degrees, we would see it modulating within its range of movement in response to temperature changes, not just snapping open and shut as the temperature moved above and below some point.
As the guy from Standard-Thomson in RossABQ's attachement says: "The thermostat stays closed until the coolant temperature reaches the nominal thermostat opening temperature. After that, the thermostat regulates coolant flow to maintain the engine temperature in the optimum range. . . The range between the minimum and maximum opening temperature is typically around 5 to 7 degrees F. . . Under normal operating conditions, the thermostat is NOT at its full open position. The thermostat is designed to keep the engine in a narrow temperature range. . . If we design a thermostat with a 0.300” full opening stroke, we may want it to operate at about 0.200” open stroke under normal conditions. If you start up a big hill, or start towing a load, the engine puts out more heat. We need to be able to open the thermostat more, say to 0.250”, so there is more coolant flow to remove the extra heat from the engine."
It is clear that we should not want the thermostat to be fully open during normal operation, say while we are cruising along, because then if we start to climb a steep hill on a hot day towing a van, and we press on the throttle to get more power, and hence more heat rejected to the cooling system, then there would be no way of increasing cooling, and the engine would overheat.
But you might think: Why don't I just make the cooling system have a big enough capacity needed to cope with this hill climbing situation? Well, because then when you were cruising downhill on a cold winters night and a light throttle, the engine would be overcooled, and your passenger would be complaining that that there was no heat coming out of the heater.
The really clever thing is that your simple wax thermostat takes care of all of this for you, making sure that the engine gets exactly the right amount of cooling as engine heat output, vehicle speed and ambient temperature change; no more, no less. For such a simple device, that's really quite remarkable.