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It's basically a damper for vibration. It adds mass to change the resonant frequency of the device, in this case the rear of the tranny. You can probably live without it but I'm of the opinion that it's there for a reason so make it tight and enjoy the smooooooth ride.
I would leave it on there too... i have one on my 71 demon drag car... i believe that mine is rubber mounted so when you grab it, it feels loose, but make sure that the bolts are tight.