What's the purpose of the 3rd argument in useReducer?

EDIT july 2020: React documentation has now better explainations on this arg called lazy initializer. Using this function in another way could result to breaking changes due to undocumented effect. Following answer remain valid.

As far as I can experiment, the init function as third arg is a transformer of the initialState.

It means that initialState will not be used a initial state, but as arg for init function. The return of this one will be the true initialState. It could be usefull to avoid huge param during the useReducer initialization line.

/* Here is the magic. The `initialState` pass to 
 * `useReducer` as second argument will be hook
 * here to init the real `initialState` as return
 * of this function
 */
const countInitializer = initialState => {
  return {
    count: initialState,
    otherProp: 0
  };
};

const countReducer = state => state; // Dummy reducer

const App = () => {
  const [countState /*, countDispatch */] =
    React.useReducer(countReducer, 2, countInitializer);

  // Note the `countState` will be initialized state direct on first render
  return JSON.stringify(countState, null, 2);
}

ReactDOM.render(<App />, document.body);

<script src="https://cdnjs.cloudflare.com/ajax/libs/react/16.8.4/umd/react.production.min.js"></script>
<script src="https://cdnjs.cloudflare.com/ajax/libs/react-dom/16.8.4/umd/react-dom.production.min.js"></script>

useReducer accepts an optional third argument, initialAction. If provided, the initial action is applied during the initial render.

For example:

function Counter({ initialCount }) {
  const [state, dispatch] = useReducer(reducer, initialState, {
    type: "reset",
    payload: initialCount
  });

As you can see, the third parameter is an initial action to be performed, applied during the initial render.

For Example: Codesandbox Example Link

My understanding is that the lazy initialization is designed for special situations that the code initializing the state is memory-intensive or CPU-intensive so the developer wants to keep the scope of the state data inside the component.

For example, if you are going to design a PhotoPane component which holds a high definition photo for editing.

const PhotoPane = (props) => {
    const initialPixelData = loadPhoto(props.photoID);
    const [pixelData, dispatch] = useReducer(reducerFunc, initialPixelData);
    ...
}

Above code has a serious performance issue because loadPhoto() is repeatedly called. If you don't want to load the photo again every time when the component renders, the intuitive reaction is to move the loadPhoto(props.photoID) out of the component. But it will cause another problem. You will have to load all photos into memory in Context or somewhere else and it will definitely create a memory hog.

So this is the time for us to introduce lazy initialization. Please check out the code below.

const PhotoPane = (props) => {
    const init = (photoID) => loadPhoto(photoID);
    const [pixelData, dispatch] = useReducer(reducerFunc, props.photoID, init);
    ...
}

The init() function is executed exactly only one time when the useReducer is first called.

Actually useEffect() hook can achieve a similar result. But lazy initialization is still the most direct solution.