It is to work as jdpber said. It is a reverse pin for the surge braking system. My 2009 trailer has a 5 pin wiring harness that connects to my vehicle instead of a four pin connection, the fifth pin connects to the reverse circuit of my vehicle, when I put my truck in reverse there is an electric solenoid on the trailer that prevents the surge brake system from moving and applying the trailer brakes. mine does have a hole in the tongue still, just in case the electric system doesn't work for some reason you can still override the braking system for reversing. On my trailer the part of the braking system inside the tongue has an elongated hole so that the pin can be left in place while towing it without the restricting the brakes from working while in forward, but block it from moving when in reverse, not sure if this is the same on yours. The older braking systems don't work with the electric solenoid and do require a manual operation of the pin being installed in order to reverse.
The shock that you are referring to is a hydraulic piston, when you put the brakes on in your vehicle, the piston compresses and forces brake fluid into the trailer brakes calipers, when you release your vehicle brake and drive forward, the piston expands again and release the pressure off the trailer brake calipers. On my trailer there is a reservoir cap on the top side of the tongue to fill the fluid, on older trailer you might have to disconnect the hose and pull the piston out. You can look it up at
www.tiedown.com, they do a lot of the OEM marine trailer part.
When the trailer is being towed, the latch should be in the down (or locked) position with either a pin thru it, or in the case of the picture the lock does the same thing, it's a safety feature to make sure that the tongue latch can't pop up and the trailer come off the vehicle while towing it, and you can use a lock it while in the closed position to prevent someone from coupling up to your trailer and stealing it.
There should be another cable that has a hook on it that you put on the back of your vehicle with your tow chains, this is a safety cable connected to your trailers braking system, should the trailer come off while towing it pulls on the piston and applies the trailer brakes as well.
Hope this helped, and answered you questions.