This felt ring is for the hub on the RX-20 star assembly (head). It provides a buffer between the plastic hub and the the shroud that, when oiled, will prevent the head from seizing to the shroud.
As the felt ages, it will become stiffer and more compressed. When the top of the ring is flush to the top edge of the hub, it's time to replace it.
The ring should be stored in bag of oil when not being used on the head.