The bearing or bushing in there supports it in any wheel drive. If it's worn, the shaft is going to wobble and tear shit up. And grease that thing. Use the black moly grease (molybdenum-disulphide) and use it thinly on the plastic parts.
Those hubs can work okay, but they have this enormous flaw--they take a couple revolutions to lock and unlock. If you are stuck and shifting from forward to backward, they unlock the axle, let it spin 5x, and relock it. --BAM-- If you understand this, you can make them live a long time. I did. Keep the grease thin on the plastic cam so it doesn't gum up, clean them often, don't beat them and they can be okay. But what's the point? They aren't made anymore. New manual ones are. Manual ones also allow a more accurate wheel bearing adjustment. A pair of regular War manuals, or even Pile Marker hubs are good enough for regular use. If you are a hardcore 4-wheeler or heft a snow plow, Warn makes a heavy hub for this axle that works brilliantly. I've only broken one in the last 10 years.