The wire is connected to a pressure switch, could have one or more applications depending on the specific year and model
-- turn off compressor clutch if pressure is too low => refrigerant level low (prevents burning up the compressor, since the refrigerant also contains the lubricant)
-- turn on auxiliary fan if pressure is high (meaning refrigerant has absorbed a lot of heat and can't get rid of it -- especially important in stop-and-go traffic)
-- turn off compressor clutch if pressure is way too high (prevents exciting things from happening)

There's another switch, it looks like, on the other port of the a/c dryer. It probably does one of the functions listed above, while the disconnected wire does another function.

The important question is, why did someone disconnect the wire? Question for you: does the a/c work? (does it get cold, I mean)

The black connector in your circle is probably the power lead for the auxiliary water pump. It looks OK.

__________________

"Buster" in the '95

Our all-Diesel family
1996 E300D (W210) . .338,000 miles Wife's car
2005 E320 CDI . . 113,000 miles My car
Santa Rosa population 176,762 (2022)
Total. . . . . . . . . . . . 627,762
"Oh lord won't you buy me a Mercedes Benz."
-- Janis Joplin, October 1, 1970