As stated, the fail-safe rod is a later Dillon design, replacing the spring-loaded return.
Without it, the powder bar may not return completely as the powder-thru die runs the slotted bellcrank.
If it is installed and adjusted correctly, it "helps" the powder bar to its normal position before the next operation of the handle. It does this during the primer seat stroke. (When the operating handle is pushed to the rear.)
I'm not sure you would get a squib if it wasn't installed, as the powder bar motion isn't defeated. But the powder bar travel may not be uniform without it, so the charges would not be uniform. (Less travel = undercharge)
I believe the operation of the fail-safe rod is important even if you skip Station 1 when reloading bottleneck cartridges with "prepped" brass. That is, you need to perform the primer seat stroke even though there isn't anything present in Station 1, so that the fail-safe rod fully returns the powder bar.