Originally Posted by
bikeman732
I think the axle should be positioned vertically in line with the derailleur mounting bolt.
While the spacer is not required, having the wheel all the way back in a horizontal dropout is not usually the optimum position. Many bikes came with one or two of these spacers , especially on stamped steel dropouts that don't have adjusting screws. The OP did not mention which side it came off of but Ihave seen them installed on either or both sides.
Gotta agree with you - and I've seen them mostly on the LHS. (completely different from the spacers that are an integral part of claw type derailleur hangers which of course go on the RHS). These show up more on bikes that have their own integrated hanger.