What is the purpose of Contact Link in the Caldera forms activity processor?
The Contact Link at the top of the page serves as a form of labeling and as a way to connect/link other entities (processors) like an Activity to a Contact on the form.

It's purpose may become redundant in the future, but just to be replaced with Caldera Forms' magic tags (kinda like CiviMail tokens).

The link, and magic tags are a way to share and pass data/properties between processors or fields, they serve as a placeholder for later available data.

In Caldera Forms, the processors are processed/executed in the order they are added to the form (the order you see them in the Processor tab, from top to bottom).

A processor has three stages of processing:


pre_processor 
processor 
post_processor 


Most processors in Caldera Forms CiviCRM do their tasks at pre_processor stage, and store their data in a transient object, the Contact processor would create a contact in CiviCRM and store it's result referenced by it's Contact Link so when the Activity processor is processed grabs it's necessary data from the Linked Contact.

Hope that gives a better picture on the Contact Link's purpose :)