The small bolt with lock nut that is in question serves two purposes. The main purpose is so the rider can adjust the height of the brake pedal in its resting position. When doing this keep in mind there has to be a certain amount of free play at the lever where the brake rod does not engage the piston in the master cylinder. So if you choose to position the lever height lower you must also shorten the adjustment on the rod connected to the rear of the brake pedal by loosening the lock nut on the rod and turning the rod in a little. If a little free play is not maintained your brake may drag, heat up, and lock up.
The small bolt with lock nut in question also acts as a stop to keep the brake lever itself from contacting the rear brake feed hose that goes from the master cylinder resivoir to the master cylinder. The upper inside edge of the top of the lever itself has a square and rather sharpe edge on it. If the pedal height is too high the sharpe edge can work on the feed hose and may cut it which can cause a lose of brake pressure. If you like your pedal position high or have no stop bolt make sure you radius the edge with a file to make it rounded instead of sharp.