This is an interesting piece of hardware, it appears that it's a memory (and other register) viewer. The board with all the LEDs is hard wired between the cartridge and the system, and whenever a data path or register is set high, the appropriate LED lights up. The other little board has a series of DIP switches that allow you to disconnect each 'pin' of the cartridge from the system individually.

This hardware was built by an Atari employee to help debug Lynx games. I believe it's a one-of-a-kind as it was hand made, but if it was really useful, maybe more were assembled...

Here's a close-up of the swithes and the LEDs: (the board with the switches also has
logic-probe points for every pin of the cartridge.)