This sits over the entrance to the tunnel that carries the water from the reservoir to the north side of the island. It was built to keep a record of the volume of water flowing through that tunnel.
Notes from the WSD leaflet about the Tai Tam Waterworks Heritage Trail:
A commemorative stone marks the inlet to the tunnel that carries stored water from Tai Tam through the Bowen Aqueduct which runs above Wan Chai and on to Mid-Levels meeting the needs of residents and businesses alike in the Central and Western districts of Hong Kong Island. The tunnel inlet, covered in iron grating, is located at the south of the dam. Access catwalks with guard rails have been built above it. The tunnel illustrates the ambition of the Tai Tam programme and the advanced engineering skills applied at that time. About three decades later, a small recorder house with coursed granite walls was built across the tunnel inlet to monitor water flows.