That 'shaft' is actually a cap of sorts, and when removed reveals this O-ring. I am going to assume it is for assembly purposes. The pinion gear 'shaft' OD is such that it will fit the tapered roller bearings. I am going to say they didn't want to use a surface that may be scarred slightly when pushed through a bearing race to be a sealing surface for a radial seal. So, put an O-ring, and a larger diameter cap that will have the sealing surface on its OD. At least this sounds good in my head...