It possibly keeps a chain allowed to loosen beyond all common sense from slipping off at very low speed. The edge urges the chain back where it needs to be. Safety issue. Some are not smart enough to know you do have to adjust the chain at some point.
If you keep on top of it you don't need the guard at all, I've removed them before.
Interesting. But why would the flip side not have one then? I noticed the sprocket is clean on the outside vs the inside. Whatever the purpose of this "guard", it prevents the migration of chain crud down the outside face of the sprocket on my bike.
Probably because there are more potential non-moving parts on the outside like bottom of shock and end of swingarm to snag and lock the rear wheel up solid. However, there may be something to the lube flinging idea. I have never seen one on the inside of sprocket ever, but of course that means nothing. AND, the wheel OD coming up to the sprocket on the inside is commonly of a size to do nearly the same thing as that guard. There being much more of a dropoff on the outside with no guard, the chain then has more slack to catch more parts.
Honda has characterized that ring as a safety feature on bikes in the past in their advertising.