Potentiometer protection circuitry
The transzorbs are there to protect your electronics from induced voltages on the cables. You could have very long outdoor cables from your electronics to the wind vane. Without some kind of protection the electronics would be wiped out during the next thunderstorm.

As to your second question, you left out the sentence before the one you quote. We don't know what the phrase "when this occurs" is referring to. However, adding some kind of input protection is good idea whenever you connect a long cable to sensitive electronics.