Note the switch had a very limited application.
Possibly '73 only - both V8 and six full-size Jeeps have it in that year.
It's not present on the '72 or '74 diagrams that I can see.
According to the Wagoneer diagrams, it is in the TCS (transmission controlled spark) circuit.
The TCS cuts vacuum advance in top gear for lower emissions (likely providing cooler combustion and lower NOx).
If you wanted, you could eliminate it and run the TCS in all temperatures.
This is what the later models do.
If you don't have a working TCS vacuum solenoid on the engine, or a working TCS switch on the transmission, the ambient switch will do nothing.
If you want to keep it, placement will not be critical - look for a suitable existing hole that's reached by the wiring.
TCS should be covered in the TSM.