As lead-acid batteries age, positive plate growth occurs which causes the positive terminal post to move upward. If the terminal post is affixed to the battery cell cover, this growth will push the cover upward. This can eventually ruin the battery if it cracks the cover or breaks the seal.
To prevent this from occurring and to ensure a longer battery life, some battery manufacturers will install a floating bushing instead of welding the terminal post to the battery cover. The floating bushing prevents the positive plate growth from damaging the battery cover by floating upward along with the terminal post.
The bushing can be compared to a piston that is free to move up or down in a cylinder bore. Just like piston rings that seal against the cylinder wall, the rubber o-rings on the bushing maintain the seal against the battery cover when positive plate growth occurs.