If it is not set, the page is swapped bit set, on the second encounter of the first page in the list, that page will be swapped out, as it now has its referenced bit cleared.
The page is swapped bit. Page will be swapped out. It now has its referenced bit. This referenced bit is cleared. This swapped bit is set. This was on the second encounter of the first page in the list. The list is this. It is not set.