This is called a load spreader and it does exactly what the name suggests. When stringing at high tensions it is essential otherwise the stress you put on the racket at 12 o'clock could be too much. The downside of this particular design is that it might make clamping the top cross rather tricky or even impossible (depending on your clamps). Some manufacturers (e.g. Gamma) sell a support post, where the load spreader ist included which gives you more room for clamping.
Techincally it's optional, but I now consider it necessary. You can, and should, remove the red pad if you use the load spreader; if you don't, the load spreader will prevent the top cross string from being straight.
Thanks! Great tip for removing the pads! It's not my machine, I haven't buy the load spreader yet, I gonna buy it here. Do you use the spreader at the racket throat as well?
It's more optional to use it at the throat. Personally, I don't - the rackets tend to twist in the machine during stringing if you use a LS at both ends. The throat area is strong enough to use the standard pad.