Spot on, The watch formed part of the worlds first electric alarm clock, patented in 1885 and invented by Jacub Burmann and made by Henri Jacot Burmann.
The bezel of the watch is rotatable and would have had a pointer connected to a wire where the hole is. The bezel is insulated from the rest of the watch via a ceramic ring. The watch would have been set atop a stand with a bell on top and holder with a clip around the winder and a clip on the bezel, when the arrow came into contact with the hour hand a complete circuit was formed and the bell sounded.
Geo, I think any anarchist of the time could have easily converted it to a bomb timer.
Below is the original patent documents for 1885, if anyone knows any site that has a picture of the complete set up I would be delighted to see it.I do have a book that describes the system but I've never seen a picture of the complete set up in the flesh.