OK....
It butts up to the rope knot .
Its easier to thread the rope in the pully end first and then hook it out. Pull some rope out.
Slide the ring on the rope and then tie the knot.
Pull the rope out ( the normal way )and the knot will go down the hole.
I think it is there so that the rope doesn't cut on the sharp hole on the inside of the pully casting. It could also be there to wedge on the knot to not come undone.
Either way I'm not happy on the design.
PS , if it's a euro pin make sure that little pissy button has completely popped back out or it WILL seperate and it's no fun trying to get it back together out on the water.
One grain of sand will give u grief.
.