If you are talking about the oil breather on the back of the head, it's to let the pressure out. If the engine was totally sealed there would be no release for the air pressure made by the pistons moving. It also releases aerosolized oil, resuculating it back through the carbs as a type of emissions/ "don't want it spraying on the rear tire" feature.
There should be a tube coming from it. I use a power brake check valve. You can search it on here.
I was gonna install a small breather filter right on it, but I was afraid it would just get saturated with oil & eventually start dripping...
It will. When that happens, or before, change the filter. They just vented the crankcase to atmosphere like that on the early bikes, but better to have a little cone filter catch the oil mist than have it on your rear tire.
TC