That is where the controller for the OEM muffler valve is installed. I'm assuming you have an aftermarket muffler so the controller was removed.
The OEM muffler had two different exhaust routes inside and could switch between them with a servo driven by the missing controller. The controller would change the routes based on your RPMs to provide the best performance by adjusting the length of your exhaust.
I've seen it said that when you go to an aftermarket exhaust you lose a little bit of low end torque (IIRC). I've also seen it said that you regain that loss with the proper tune for an aftermarket exhaust. The Buell race team ran a straight pipe exhaust with a tune so I think it is safe to say you can regain the loss with a tune - or maybe they just always were above the impacted RPM zone...
When I installed my aftermarket exhaust and tune my seat-of-the-pants dyno felt a performance increase starting mid-RPM with no loss on the bottom end, but maybe I was just drunk with the new, beautiful sound my bike made...