I once added a similar tapping to a replacement cylinder. It was the return for gravity circulation around a hot water loop feeding a bathroom on the other side of the house.99% of cylinders in hot water systems use the top connection to supply hot water to taps, showers etc.
That side tapping I've never seen before, possibly added?
It worked well too. Hot towel warmer and instant hot water in the bathroom without a pump (and warm floorboards the length of the landing, so zero points for efficiency).