It's for the inverter bypass relay. When plugged into an outlet and AC is sensed, it will shut down your inverter to prevent damage. Conversely, if your inverter is on and in the standby mode and AC power is lost, it should kick the inverter on, similar to an uninterrupted power supply (UPS) Often they install a separate transfer switch/relay instead and in that case it would not be needed since they essentially do the same thing.
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