That's a disk notcher.
Insert a 5.25 inch floppy disk into the slot, push down, and a small square of plastic gets chopped off the edge, precisely where it needs to be. If the drive detects the notch, it knows the disk is not write protected. No notch tells the drive the data on the disk cannot be altered. Maybe you have disk that's write protected, but don't care about the data, and need a disk to store some data. Make the notch, format it, and that disk that might have been a useless game at some point can now be used to hold a few documents or something. If you then wanted to protect the data on that disk, you could simply cover the notch with tape. Oh and it's worth mentioning disks were double sided but didn't always come with notches on both sides. So if you wanted to write to both sides, you'd need a notch on both sides.
Something like that. It's been awhile. If I remember correctly the 3.5 inch disks used the same tech but came equipped with a switch directly on the disk that could be set to either leave the notch open or cover it.
Might even be worth mentioning/adding the fact audio and video cassette tapes had something similar as well. If you bought some music, and it sucked, but needed a blank tape, one could simply cover the 'notch', then record whatever they wanted to that once 'protected' tape.
It's been so long though and I was a child when messing with these things. I might have it backwards where the notch means the opposite of what I mentioned. These are really hazy memories but I'm feeling all nostalgic now.
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