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Like others have said, it's a magneto. Joe Hunt, and Morris, are the 2 main magneto companies still running in the states. One in your pic is modified in a few ways, that toggle switch is likely the killswitch. Magneto killswitches are usually just grounds that send the current somewhere other than the spark plugs, which will shut the motor down.
The magneto replaces the ignition coil and the ignition timing module. Magnetos are mechanically driven off the crank or cam, and generate electricity for the spark plugs. With no ignition module to retard/advance timing, magnetos are manually adjustable on the fly. In most setups the timing only needs to be slightly retarded for a cold start up, once the bike warms it gets advanced and left alone while the bike runs. It's also possible with a magneto and kickstart to have a motorcycle that uses no battery. Someone I know added a kicker kit and a magneto to their Sportster and runs it with no battery (uses a couple of heavy duty capacitors instead to help regulate power).
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