I have the same switch - It's only the markings that are a misnomer/confusing.
Consider the "individual circuit" pole and the "12V supply" pole as a single
throw switch (I.e. open and close). This is what interrupts the supply to the nav light.
Now add an LED inside - you need to ground that hence the "Ground for Light" pole.
Anyhoo you have a positive supply and negative ground available - I don't care where it comes from (at this point)
Connect the positive supply to "+12V Batt" (powers the switch LED and potential for nav light)
Conect nav light positive to the "individual" circuit (nav light wire)
Connect negative to "Ground for Light" (ground to ships ground)
The negative from the nav light will need also need to go direct to ships ground but has nothing to do with the switch.
(edit - PS. I hope it is implied and crystal clear that you do not want to connect ground to either "+12v positive" or "Individual" circuit poles.)
Now why aren't you running this circuit back to the switch panel where you tie it into the stern light and have the position lights on one fuse and one switch?