I'm not sure what it does.

Maybe 1 of the Trans Guru's will help.

Spacer between the 1-2 Shift Valve & Low Valve looks like it puts more tension on 1-2 Shift Valve Spring. Firmer 1-2 shift? More time between shift?
The 3-2 Piston O-ring in Servo is discarded also, where the Gold washers are used?