It's a transmission controlled vacuum switch.
That wire on the tranny is the ground switch. There's a little plunger inside it that doesn't make a ground contact until you switch to high gear.
The switch provides a ground for another switch up by the carb like in this link.
http://www.classicindustries.com/pro.../11144320.html
That one has vacuum supplied to one barb with another hose hooked to your vac advance on the other barb. I can't remember which hose goes where.
It has 12v power to it and the ground wire from it goes to your tranny.
Normal operation is no vacuum to your vac advance until you put it in high gear.
Used on motors where you didn't want or need a lot of timing at lower speeds.