There's no pic posted and a full engine MODEL # would help.
The breather, on the older machines, used to vent to the atmosphere.
That hole allows the crankcase fumes (as positive and negative pulses
happen due to the piston going up and down) to vent.
Again, in the older machines, the valve spring access cover used to have
a "spongy type" of material in it. That would catch most of the oil vapor and allow it
to drain back into the crankcase (thru a smallish hole). Some machines, the spongy material just sat inside that
area.
Newer machines have a vent hose from the crankcase to the air filter area so the engine
can burn off the fumes and not release them into the atmosphere .
The engine parts diagram would show what should be installed in that area.
***Also, being a flat head engine, check, re-tighten the 3 HEAD BOLTS closest to the exhaust valve.
99% of the time they loosen up (hot and cold cycles) and need re-tightening. Very loose bolts
will keep the engine from running.***.
.