The "condensate loop" acts as a "trap" similar to any drain like below a sink. That loop is specifically required because your condensate line drains to the floor drain on the basement floor. If any smell was to come from the floor drain then that smell could not migrate up into the HRV ventilation system.
Some condensate lines drain into a black plastic tube close to the basement foundation wall. These black tubes also go under the concrete floor to the floor drain.
HRV condensate (water) is a result of the function of the HRV. As we all know,
warm air holds more humidity than cool / cold air. As the HRV ventilates the home at this time of year, it sends the warm "stale" air out of the home and brings cool "fresh" air into the home. As the HRV transfers heat from the warm air to the cool air the moisture in the warm air falls to the bottom of the HRV where it goes down the drain.
BTW, the HRV condensate loop should not be so small that it kinks or it can get clogged. It should also be secured with electrical tape, not foil tape that is not suited for that purpose and not a tie strap either because that could cause the tube to kink.
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