Brake Pressure Differential switch. Basically, if the pressure in the front lines is greater than the pressure in the rear lines, a little piston moves forward or backward and grounds out that switch. The pressure differential can be cause by low fluid in the front or rear system or another hydraulic failure.
Is it needed? Typically the "brake" light lights up when the brake pedal goes to floor. For most mechanically inclined folks, the brake pedal going to the floor is a pretty good indicator that something is FUBAR, so the light is a bit redundant...
