This O-ring is around the oil drain plug so that the oil stays neatly in the block when the plug is screwed in.
If, when changing the oil, you see that the ring is damaged, replace it, otherwise you will lose the engine oil drop by drop.
This will cause oil stains on the floor and thus hassle, and at some point you may end up with too little oil in your block due to the leaking, with all the consequences that entails.