The microswitch is the glowplug post-heating defeat switch. The glowplugs continue to operate after the amber light goes off and the engine is started on a TD. They stay on if either the coolant is below 60 degrees c or the engine is idling. If you take the engine off idle (about one third throttle actually) the switch in question operates and cancels the post-heating by dropping out the post-heat relay.
The post-heat system also operates the cold start advance electrovalve on the side of the pump and having (usually) an orange wire attached.
In the UK, both post-heating and cold advance can be lived without fairly happily but is essential in cold climates. In Spain you'll be fine without it I would have thought unless where you are gets very cold in winter...
be very careful with second-hand pumps. You have the Bosch VP20 with automatic injection advance. Itr does not use an ECU to control timing. The VP20-AS3 looks nearly identical but has a three wire potentiometer in place of the microswitch and uses an ECU to control injection advance; they are not at all compatible with each other