as of the 1968 model year, all cars and light trucks sold in the U.S. were/are required to have front and rear marker lights. amber in the front, and red at the rear. the idea is that this makes the vehicle more visable at night time. some manufacturers choose to make them also flash with the turn signals, while others don't.
in some states they have to be working in order to pass a yearly inspection, necessary to license the car.

So it is like a parking light then? It jsut comes on with the lights and doesn't blink or anything?

Its a red light and reflector, just like the yellow one on the front fender. They are legally required, I'm trying to find it in the Vehicle Code book, but you can take them off and no one will say anything. If the wiring is stock, the light doesn't blink with the turnsignal.

Hello,
I just noticed that american 1200 have reflectors or lights on the back quarter panel of their cars.
Just wondering what it is and why it is different to Australia. Was it a law thing? Or just a different area styling thing?