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The engraving setting that I use removes the paint layer and a thin layer of the acrylic underneath.

I have attached a close-up photo of the engraving on my fuel selector. The thick white line is about 1mm wide and you can see some small etching marks on the acrylic underneath. The depth of the engraving is about 0.2 mm in this case and you can feel it when you run your finger over it.

I use K40 Whisperer to do the cutting and engraving (http://www.scorchworks.com/K40whisperer/k40whisperer.html) and the files that I have posted on Github (ex. https://github.com/allanglen/c172-flight-sim-panel/blob/master/parts/avionics/garmin-gns-530/faceplate.svg) are prepared for that program (just open them up in K40 Whisperer, set the appropriate speed, and click Raster Engrave).