High voltage does not need to be high. For 3.3V circuit, 5V from voltage spike or ESD shock can be too high. ESD shock especially much much higher (1000s of volts).
But yeah, specified LED is normal and not used for this purpose. I don't know what it does. Maybe reverse polarity protection? Usually diode like this would burn out in that case, but may save circuit if problem was realized and circuit disconnected right away. Reverse polarity protection diode in series works better and protects for longer, but has voltage drop on output. Parallel diode doesn't protect for very long but has no voltage drop on output.