Well done George and Martin you clever chaps. Both of you were right in thinking it was a float holder for drip drying float tops/sights.
I have been busy cutting and shaping peacock quill into simple lift floats ready for some close quarters carp fishing in the summer. Using this simple and recycled float holder means I can get a really nice round top on the float and paint fifteen or more floats at a time.
As for the bit of card inserted into the slit in the sponge! I did this because even after sanding, the tapered bottom end of the floats still caught on the soft sponge. As I was dipping them multiple times in the paint, they needed to be inserted quickly and easily into the holder. The bit of card allowed me to push the float against it and slide it into to place with no fuss.