Have you ever seen an M16 like this before? Look closely. Right below the detachable carry handle’s rear knob, there is a piece of metal on the side of the upper receiver. Weird right? Well it is actually an experimental rear folding sight. It folds down flat and the carry handle has a notch to accommodate the stowed rear sight.
According to this book, the folding rear sight has a windage adjustment on the right side of the sight.
I am not sure why one would need a back up rear sight when they have a carry handle rear sight to begin with. Of course you could remove the carry handle and mount a red dot, but I do not think that was Colt’s intention when designing this rear sight.