The reinforcement bar goes into the bumper shock holes and attaches to the chassis frame as described:
Also interesting to see the US bumper mounting threads but no hole for the shock. This was for a Euro W123 with the trailer hitch (without reinforcement that goes into chassis):
This is how the standard Euro W123 rear bumper mounts look like without the two extra screws:
Again, in this thread:
http://www.benzworld.org/forums/w123-e-ce-d-cd-td/1535693-euro-trailer-hitch-any-value-us.html