What Does the System Reserved Partition Do?

The System Reserved partition contains two important things:

• The Boot Manager and Boot Configuration Data: When your computer starts, the Windows Boot Manager reads the boot data from the Boot Configuration Data (BCD) Store. Your computer starts the boot loader off of the System Reserved partition, which in turn starts Windows from your system drive. 
• The startup files used for BitLocker Drive Encryption: If you ever decide to encrypt your hard drive with BitLocker drive encryption, the System Reserved partition contains the necessary files for starting your computer. Your computer boots the unencrypted System Reserved partition, and then decrypts the main encrypted drive and starts the encrypted Windows system.
The System Reserved partition is essential if you want to use BitLocker drive encryption, which can’t function otherwise. Important boot files are also stored here by default, although you could store them on the main Windows partition if you preferred.