This small o-ring is used to seal the plastic side marker lamp fitted to the front fender of 1985-on classic Minis. Without it, the bulb socket will not fit properly into the lamp, so it should be replaced whenever the bulb is changed. This o-ring not only seals out moisture, but it also is necessary to hold the socket in place. Ref: AFU3112.
This part is a component used in conjuction with the AFU3358 wiring harness (sold separately).