Prevents the stock from splintering. The recoil of launching a 1 pound 11 ounce grenade is considerably greater than a .303 bullet, and the recoil of the cup is on the nosecap, thus transferring onto the stock.
In actual use the cup is adjusted so that it is bearing directly on the muzzle and additional stresses go through the barrel. Secondary stresses due to whip of the barrel affect the wood, hence the cross-bolt and wire wrap. I have a vague recollection of reading that the wire and extra bolt weren't always used but would have to dig around to find the refernce.
milsurpo