Why is this ring used near the Crankset?
You have an older pre-cartridge bottom bracket. The bottom bracket is the axle and bearing assembly for the crankset. Rather than sealed bearings it has either loose ball or caged bearings. While the bottom bracket is assembled  the cup is adjusted to the correct preload. Preload determines how much movement there is between the bearings and the axle. It should be adjusted so there is a minimum free-play but still spins freely. Once the adjustment is made the ring is tightened to hold the adjustable cup in the correct position.