That seal does do work; the labyrinth seal concept will function much worse with it cracked like that. Water and grit will have a much easier path in.
This question has the nuance that the answer really depends on whether you would ever consider putting on a new rim when this one eventually meets its end. Most people wouldn't for the hub on a midrange Shimano prefab wheel, although there's nothing intrinsically unreasonable about it and in some cases (this is probably one of them) it's doable without jumping through too many technical hoops. The main one would be deciding whether to re-use the spokes and track down a replacement 24h rim that happens to be the exact right ERD, or finding a rim you want that matches with available Shimano spokes with the same head design, or making the determination that you don't mind using generic straightpull heads, which would then allow you to use whatever rim you want. I believe the nipples and rim hole on this wheel are standard or close to it.
If this were one of the standalone Dura-ace, Ultegra, or 105 hubs with similar contactless labyrinth seals and you wanted the hub to last through the highest number of rims possible, yes it would matter. If the goal is making it through just this one rim, and you're the type to even think about overhauling it when it doesn't feel so hot, it almost certainly doesn't matter. Maybe you wind up having to overhaul it a time or two more than you would otherwise. It does depend on your habits and climate; if you're riding in constant wet weather, it could be somewhat worse than that.