This was a question Ben asked me the other night. I didn't have a definitive answer other than to say it was a carryover from the original 1200 that preceded this, unofficially referred to as the Mk1. (To be honest I wasn't 100% sure the original 1200 had this, so I had to do some sleuthing and verified that indeed, yes, it had the same bubble.)
But why?
Chatting with my friend John (who used to repair these things for a living) cleared it all up. The original 1200—and indeed the 1100 which preceded it—were sold in two versions: one with a pre-mounted Technics tonearm, and one that allowed the customer to mount a 3rd-party tonearm of their choice. Since those arms came in a variety of sizes and configurations, the bubble was to allow for their varying heights. Why not make the whole dust cover higher? Probably cost.
The 1200Mk2 was never available without a Technics arm (although there are a number of after-market mods that allow you to do that if you're so inclined), so I was correct that it was simply a way for the Technics designers to pay homage to the previous generation. When these Mk2 tables first appeared on the scene in 1979, I hated the bubble—and was, in fact, not overly impressed with any aspect of the 1200, being wrapped up as I was in fully automatic operation and digital readouts—but over the years I've come to appreciate it's funky aesthetic and can't imagine it not being there.