It is for shielding to prevent possible 50/60Hz interference caused problems on the motherboard where this cable will pass by. You should connect it to chassis to the nearest convenient point, i.e floppy or HDD screw or other nearby screw.

Ah. OK. Thanks for that. Not sure if I fully understand what that means.

However, why do ATX PSU's not have this?

pan069 wrote:

Ah. OK. Thanks for that. Not sure if I fully understand what that means.

However, why do ATX PSU's not have this?

Simply because everything carrying mains power is inside the PSU casing with those 😀

Edit: occurred to me I've got an opened AT rig in the project corner, easy enough to snap a pic:

Just connect the wire terminal anywhere you want in the metal parts of the case.

Ah. That makes sense. The PSU is already connected to the chassis...

pan069 wrote:

Ah. That makes sense. The PSU is already connected to the chassis...

Yeah.

Also updated my last post, you might be interested 😀

That's not for shielding but to protect you from death should the PSU or the switch ever fail in a way that puts mains voltage on the chasis. You MUST connect it, since that switch is directly connected to mains. And that is also the difference to ATX.

As derSammler said this cable is used for grounding the chassis close to the switch.
If there is solid continuity between the metal where you screw the PSU into and where you screw the switch into you don't necessarily need the ground wire. If you mount the switch directly into plastic or use rubber mounts to silence vibrations from the PSU or simply use a plastic case with no continuity between PSU housing and switch mount it's very wise to install the ground wire so you don't get zapped if a malfunction puts mains power on the case.

If the metal frame of the switch is grounded well, the amount of power discharged through you if the switch fails will be kept low and the local breaker or RCD will be tripped faster and more reliably.