>>1067648It's a chain tensioner. With short vertical dropouts you can't move the rear wheel to tension the chain and unless you're using a specific chainring and cog combination you'll need one to take up the slack in the chain. Other options would be an eccentric bottom bracket (it can move forwards and backwards), possibly using a half-link in the chain, or using a ghost ring (pic related).
Also that bike has a geared hub so it's not single speed.