That linkage/mechanism is on the throttle lever side of the governor and should have NO effect on surging.
As to what it originally did, as you advance the throttle lever increasing ''pull'' from the governor spring tries to move the lever to a lower speed setting, fighting the friction pad on the throttle lever.
I'm NOT real familiar with this particular tractor, but in general Ford used the term ''governor compensating'' to describe parts that contract the force that tries to move the throttle lever to a lower setting.
To try to correct the surging, first make sure the length of the linkage between the governor and carburetor is correct.
Basically, the carburetor butterfly lever should reach it's end of travel in the ''open'' position JUST BEFORE the governor lever reaches it's end of travel in the wide open throttle direction.
If that is correct and it still surges that would possibly point to a slightly lean condition, or an internal issue with the carburetor that causes it to not transfer properly between the ''load'' and ''idle'' circuits.
What's the history of the carburetor, it appears it MAY be an aluminum aftermarket ''knockoff'', did the surging begin with a carburetor replacement?
Has the engine ever NOT surged since you've had the tractor, and, if so, at what point did the issue show up?
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