yup. its a filter..
on air its pretty redundant..
yup. its been said what it does, i know im repeating, but what i can add is, i can tell you why it got mangled and how to avoid it in the future..
if you have removed the inline reg, put the filter in the marker, it doesnt sit very well in the body, the slightest movement (even tilting the Ion) will upset it, so if you put it in the Ion, and then screw the Reg in, quite often it moves and gets Deformed by the Reg as it jams when it tilts.. (try it with your finger and you will see what i mean).
Always put the filter on the top of the Reg, then screw it in carefully keeping the reg and gun upright, (a smidge of grease will keep it on the reg while screwing..)