Its shown in the right place. It is intended to cushion and quiet the upward stop of the seat.
The nut on the bolt needs to be a lock nut instead of a lock washer because the bolt has no tension when a person is sitting on the seat. Some of my DCs have a castle nut with a cotter pin. Others, I use a double nut or loctite to help keep the seat safe.
Most important is the horizontal pivot bolt and pivot bolt holes be in good condition. Most of my DCs came to me with this bolt and holes in poor condition. Failure here can suddenly dump a person off the back. Story of a farmer getting cut up and killed by a disc because of seat breakage makes me non-apologetic for mentioning safety.