After the passage of the '94 AWB, some manufacturers simply made plain, crowned barrels. Just lobbed them off square on the end. Other manufacturers pressed on brakes, pinned on, or welded on brakes. These devices could not be easily removed or changed by the consumer.
Olympic wanted you, the customer, to be able to attach something to the end, a brake, comp, etc, via set screws, but wanted the device not to blow off the end. The groove is a place for set screws to lock into and firmly hold such a device. Also, they hoped that if the ban was lifted in the future, a setscrew flash hider could be attached. I would not be surprised to see setscrew type flash hiders available soon.
So, don't get on Oly's butt about this... you can blame the Clinton gun ban. Oly did their best to come up with a suitable solution to the problem of no barrel threads as forced on us by the Clinton gun ban.
So, that's whats up with the goofy groove.