That is a great guess @Bronson06, but by the looks of it the LED is wired to the first cell only, if the JST-XH connector was wired to first and last it would be too much voltage for the LED and it would burn out, and I can see no way to move it down the line to drain each cell to 0 volts unless you cut up the connector. Just my thoughts going from the picture.Based on the picture I believe it's a discharge light.. Once there battery is no longer good. Attach to the balance connector. The light will come on and discharge the battery completely. Once the light goes out, it's safe to throw it into the recycle garbage..
There is another reason that a few companies have been sending this type of thing. They can call it a battery powered light which gets around some of the shipping restrictions on batteries alone. Shipping LiPo batteries is expensive and has a lot of restrictions due to fire hazard, but slap an LED into it and it can be classified as a "flashlight" and most of those costs and restrictions go away.