That is a regulator and is actually a zener diod.
The zener diod has a zener voltage.
It is wired from the plus from the alternator/rectifire to ground and when the alternator voltage reach the zener voltage the zener diod/regulator closes and ground out.
This function is soo the charging voltage will not reach up to more then about 16 VDC.
If you measure with a VOM over the battery and rev up the engine to about 2500- 3000 RPM, the charging voltage should not go over about 16 VDC.
Then you know the regulater is working.