This channel plays a role in engine venting, this is what it is for.
The trouble is that it becomes very clogged with oil residuals. When you restore a car there is no other way to clean then to drill out the rivets and rivet i ton back again, which is not simple. I think, as it is clean inside and rivets do not seem original, that that was the procedure performed here.
I would check if it is not lose. If it is, it has to be removed.
Personally I would not leave it like that, but I am not qualified to say if you can drive without it. I would definitely replace it or replace the valve cover.
Another question is what smashed it. Was it just because it was lose, it went down a bit and got hit by cam or valve lever? Or something else happened there?
Someone may chime in with advise if engine oil passages need to be flushed to get rid of any potential small metal debris.