What is this sealed electrical component?
I believe this is an &quot;interlock module&quot;. It contains some components and an SCR. The SCR acts as a latching relay that requires no external power (other than from the low voltage side of the magneto) to maintain conduction after the engine starts.
See, for example, Patent US4033311.
By the looks of it, the gear switches must both be closed and the handle switch maybe open for it to start. Or the handle switch may act as a kill switch so it must be closed for it to continue to run, whereas the other switches need only be closed to start it (probably more likely). In the latter case, the thyristor completes the circuit to ground from the red wire through the handle switch.
This is for the kind of engine electrical system that consists of just the magneto, no battery and therefore no starter motor, no electronic ignition and no charging circuit. Like a mechanical kill switch, it must be closed, completing the circuit- typically to ground- before the ignition spark will be generated.
Bypassing it is trivial, but not recommended, for obvious safety reasons.