There are two basic ways to regulate voltage: a "shunt" or "linear" regulator (most 3 pin regulators are shunt regulators) and a DC-DC convertor. The shunt regulator requires a greater input voltage than output voltage and acts like a variable resistor whose resistance varies to keep the output constant. It's not very efficient, but it's simple and inexpensive. A DC to DC converter chops the input DC into AC, runs the AC through a transformer to step up/step down the voltage, and converts back to DC. They can be amazingly efficient (efficiency here is what percentage of input power is converted to output power, the remainder is lost to heat). DC-DC can be as efficient as 94% or so, shunt regulators are often less than 50%, although that depends a lot on the difference between the input and output voltages. If you could get a .5V shunt regulator (you can't, I've never seen one which worked below around 1.2V output). It would be very hard, but not impossible, to build a DC-DC regulator with a .7V output. Not sure how you can get below the "diode drop" voltage. All regulators consume energy when connected, so yes, you would need to switch them off when they weren't being used.