I can not figure out why this coin would be encapsulated? Am I missing something?

No idea why but is it in third party grading slab?

I have no evidence that it has been graded hence my curiousity in why it would be in this type of holder.

Is there any writing or label on the plastic holder?

Show a pic of the entire holder - then we'll know.

It appears as if it might be in a PCGS slab - if you're asking why, that's easy. If a coin can grade high enough it can be sold for a lot of money.

I see this a lot......old collectors used to do what people are doing today....saving the new coinage of the day...like todays state quarters...a lot of the time older collections will have some spendable change in them...this might be the case here

to me it looks like it is one of those hard plastic 2x2's

You might want to edit the sub-title for the name of the thread. It threw me off for a moment.

Thats the famous 1927S transposed digit cent!!