The "Link with Editor" is a useful toggle button in the Project Explorer.
When it is enabled, the Project Explorer node corresponding to the active editor gets selected automatically (and the Project Explorer is expanded if necessary). Use the "Link with Editor" button to understand the context of a particular editor. For example, assume you have a state chart diagram open in an editor and want to know where in the model this diagram is located. By enabling "Link with Editor" the diagram is selected in the Project Explorer.
"Link with Editor" is a general Eclipse feature that works with all kinds of editors, not just diagram editors. For example, you can also use it for transformation configuration editors, C++ source code editors, and so on.
You can have "Link with Editor" always enabled, or you can have "Link with Editor" disabled by default, and only enable it to navigate from an editor to the Project Explorer.