What does the black circular object do?

It could help to know the vehicle make and model.

It looks exactly the same as our alarm status light for the system fitted by the dealer to our Hymer. When I lock the doors it glows red for about 15 / 20 seconds while the system sets, then flashes about every 2 seconds until the system is switched off by unlocking the doors. It also flashes in different ways if the system has been activated. The little button below the light can be pressed in various sequences to turn aspects such as the movement sensors off, although I have never done that.

Ditto SteveL comment above.

ours also gives a couple of beeps if the doors and hatches are closed but the magnet reed switch has not fully functioned.  Giving the door a polite thump usually latches the reed switch closed.  

if any door is actually unlatched, the alarm is more persuasive in its tone !

if there are internal sensors, the button will switch them off. Ie if just locking at night and not wanting to wake the site up with the alarm whilst having a midnight wander.

rgds