Water running down the wall is the issue for older windows. Rain is not the main issue because any water, including from a garden hose or high pressure sprayer, can cause water to run down the wall of your house.

You'll notice the window has a similar ledge on the bottom of it to divert water running down the window away from the bottom edge of the window in order to prevent water from seeping in under the window into the wall. Similarly, this ledge above the window is intended to divert water away from the top edge of the window so it doesn't run down the wall and seep into the wall above the window. These design features are common in older windows that were installed flush with the exterior of the house. In even older buildings, windows were recessed in thicker walls which eliminated the need for these ledges, as long as the lower part of the wall was canted to drain properly.

This water seeping in around windows has historically been a major issue of failure in buildings and was solved in modern construction windows by including a flange as part of the window frame, so any water seeping down the walls is stopped at the flange. It works so well, no one builds these drip ledges anymore.