Right, but if you look at the function of the circuit, pressing the starting button (if the circuit is as per the diagram) leads to a circuit that goes nowhere.
On the other hand, if you hypothetically pull the blue-with-white-stripe wire to ground, it grounds one side of the main starting motor relay. The other side of that relay (red with white stripe) comes from the "starter relay", whose internal function is not discernible from the diagram, but other wiring involving that relay and the one next to it is coming from power from the ignition switch, the side stand switch, the clutch switch, the neutral switch, etc.
Obviously the missing pin needs to be grounded, as the original poster has found out. There is a fair chance that the stock design of that switch housing internally grounds that circuit, and something that was done in the process of customizing that bike removed that circuit's path to ground.