It doesn't need to be but can be
It is for the Chime to come on when driver's door is opened with key still in ignition, to prevent locking keys in the vehicle
That black wire is Grounded when key is slid into ignition, and GEM Module will turn on the chime if that wire is Grounded AND driver's door is opened
Many cut that wire, lol, because if the "door switch" sticks, which is common, then chime comes on all time
Shown here, in place, on the key cylinder's mounting hole:
https://www.explorerforum.com/forums/attachments/005_zpsa2cb6a23-jpg.279290/
This one has PATS anti-theft ring and module(white label), which your 1998 won't have