The hole is a vent that allows air in. If you will notice as the pads wear the level in the reservoir falls. The fluid is having to fill the "larger" space behind the pad in the caliper cylinder so something has to take the place of the fluid that is now missing from the reservoir. I make it a habit to fill the reservoir to the "full" line after installing new pads and when the level gets to the min line I pull the wheels off and check the condition of the pads. Sometimes - based on the vehicle (the Honda comes to mind) the pads are ready to change when the level gets to min.

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Jim