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This is a Shimano Bleed Block made 1mm undersize to allow for extra oil in the reservoir to reduce the free stroke.
A common problem, especially with Shimano 785 disc levers, is excessive free stroke causing the levers to become very close (or touching) the bars before fully engaging the brakes. This makes it difficult or impossible to have your fingers under the levers.
As a fix, people have used thinner shims instead of the Shimano Bleed Block to move the pads closer to the rotor. Thus allowing you to add extra oil to the reservoir and reduce the free stroke.