It is called a brake pressure differential warning switch. In theory it is supposed to allow pressure to the front or rear brakes in the event that either or fail. So if your front brakes fail, the car will be able to stop with the rear brakes or visa versa. The horizontal piston is supposed to move, this is what defers the pressure. When cleaning this valve you should always remove the switch (plastic cap, top center) to avoid cutting the actuating pin in half. If your brake light on the dash of your car is on all the time, this switch is probably the culprit.
Well, if it's really just a Differential Pressure Switch, it's ONLY job is to detect when there's a big difference in pressure between front and rear brakes, eg. you popped a line or ran out of juice. That's all that it does, it doesn't affect braking, just the idiot light on the dash.
The Technical Service Manual tells how to reset it after bleeding the brakes. During a brake bleed, you often have normal presure in (say) the fronts while bleeding the rears; the switch lights the light indicating 'loss of rear pressure relative to the front'.
There are so-called "combo valves" that combine this function with a brake pressure holdoff or presure reduce or something, but they're relatively uncommon. The press. diff. sw. is far more common. You don't really need one. I regret installing mine back in my Hornet when I replumbed and rewired the chassis. It just adds to the clutter; like a lot of enthusiasts I maintain the sh*t out of my cars and don't need the idiot light; I prefer a simpler car.