It appears to me that this part serves two purposes.
1) A way to periodically add grease to the shaft. (turn the cap in every 10,000 miles as per shop manual)
2) A way to calm down the wobble of the shaft in order to maintain the correct alignment between the rotor and the distributor cap contacts.
It does not take much spring pressure at all to calm down the wobble, since there is no side load at all at the top of the shaft and very little load at the bottom of the shaft where the gears are located.
Carl
