My 70 chevelle 396 has a plug in the block where the TCS switch goes. I have the hook ups on the firewall for this and I have a new TCS switch. Is this a necessary item and what purpose does it have????

It's only required if you want to do a perfect restoration. A lot of information here on TCS. Hit the search key (upper right) and search on TCS. Here's one:
http://www.chevelles.com/cgi-bin/forum/ultimatebb.cgi?ubb=get_topic;f=22;t=002774

The TCS switch that mounts in the pass head is a temp switch. Two terminals, one for temp below 82deg and one for above 232deg. These were wire together such that if the water temp was below 82deg OR above 232deg it would energize the override relay (the relay on the firewall) which would remove power from the vacuum solenoid and allow full vacuum advance.
If you have the rest of the system hooked up it will be active all the time and you will not have vacuum advance in low gears.