The purpose of the breather is that if you're in a bog hole or under water (with the wading plug in) the metal cover contracts slightly with a change of heat and will suck water in through the mating surface of the timing cover. This will cause water to enter your timing belt area. Having a breather means that the change to a relative negative pressure in the timing cover when it's cooled, will not compromise the sealed mating surface, as air will enter through the port of least resitance, which is the breather, and that air will be clean.
It's the same principle as a diff breather. Some people put similar breathers on their winches and actually run a low psi positive air pressure into the housing so that when submerged, there is no chance of water / mud ingress.

