The 'box' reticle controls the focus point and focus lock. The 'circle' reticle controls the exposure point and exposure lock.
Dragging the reticles around sets the respective points of interest. For example, the camera will focus where the focus reticle is positioned.
Tapping once on either reticle will toggle a lock (assuming the camera supports locking the settings!). To freeze focus, you would tap the focus (box) reticle. A little lock icon will appear on the reticle to show the setting is locked. Tap again to unlock.
When the exposure (circle) reticle is not locked, exposure will be set automatically for the duration of the session.
You can start a timelapse in darkness and let it run all day, when exposure is not locked, it will adjust accordingly. However, keep in mind that depending on the exact device, the end result may show considerable flicker as the iPhone's exposure is not entirely consistent - this can be solved with post editing on a PC with video post editing programs.
The iPhone does not provide access to low level camera settings such as actual exposure settings or shutter speeds. TimeLapse can approximate long exposure in Express mode. The exposure setting simulates a long exposure time by taking multiple shots and combining them. It is a simulation so it doesn't really capture more light but it can do a decent job at reproducing motion blur. See this video for an example: viewtopic.php?f=18&t=372#p730