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I believe this is what you’re supposed to tug on/pull instead of putting your hands on the cable itself. Sometimes cables get frayed and sharp and quick cut you, one of those things. Plus it looks way cool.
Hold on to red strap when you pull out your cable or feed it back into the winch. This is so you don't seriously hurt your hands. Always still make sure you wear leather gloves when operating your winch.
It’s primary purpose is to keep your hands away from the fairlead or recovery point pinch points when storing the winch line. It’s also easy on the hands for pulling line, but you should be wearing gloves for handling wire rope anyway.
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