That's where the lower shaft bushing rides and has left its imprint on the shaft from lack of lubrication. DO worry about it. Replace the two bushings and shaft or you will have lateral slop between the shaft and bushings, which will affect the points gap as the shaft spins. Cheap and easy solution: Replace both bushings and upper shaft and periodically drop some 3-n-1 oil through the side brass oiler or install the drilled upper shaft already made for dripping oil down its center.
Marshall