Yes it is a 10 volt voltage regulator for the gauges.
(Fuel and coolant temperature).
The modern regulators are fitted face down as the pin order is 'reversed'.
If I was being pedantic, the wire to the voltage regulator is the black ignition live.
There is also a ground connection for the voltage regulator. (Not shown).
The red wire would be battery permanent live for a clock where fitted.
And then a 10 volt output from the voltage regulator to the gauges.
The gauges are wired in parallel -
(In your case - you have no temp gauge).
So both receive a 10 volt input and both have their own output wire in the 14 pin connector.
The fuel gauge wire goes to the gauge sender.
The temp gauge goes to the coolant shortage unit (relay like module with 42 or 43 printed on it).
(Only on water cooled.)
As for availability,
Everything you need to know is here.
https://www.brickwerks.co.uk/t3-parts/e ... ation.html
Although used parts do come up here or on ebay from time to time, if you are watching the pennies.
UPDATE - apologies, I initially half read your drawing.
I failed to realise you had an air cooled van.
I must do better next time.
As for your readings - without the regulator,
the needle deflection will vary along with the system voltage.
So chances are, the more items you have switched on, the lower the gauge reading will be...
Also the gauge may read lower at idle due to lower engine and alternator rpm.
The regulator gives a good steady 10v baseline for the gauge to work on. Assuming the battery voltage does not drop much below 11.5 volts-ish.
1983 Tin Top with a poorly DF and 4 speed DT box.
1987 Electrics and a DJ engine.
Maybe one day I might get it finished