We meet Mr. Alger early on in Moon Shadow's story, and the narrator soon tells us it is to be a fortuitous meeting. Indeed, Mr. Alger is the first kind "white demon" we meet by name in Dragonwings. Though the idea seems obvious, it's important for the book that Yep shows how varied "white demons" are as a category of people, just as he shows how different Tang people can be.
After Mr. Alger, of course, we meet another remarkably good demon in the example of Miss Whitlaw, but we won't meet her until Chapter 6. And it is only through Mr. Alger that Moon Shadow's life crosses paths with Miss Whitlaw's. Without securing a job through Mr. Alger, Windrider and Moon Shadow might have moved somewhere other than Miss Whitlaw's stable.
Through the first encounter with Mr. Alger and his horseless carriage, we also learn a lot about Windrider. The event both demonstrates Windrider's ability as a mechanic and his honor as a man who is willing to help without self-benefit. We already respect Windrider at this point, but his goodness in helping a stranger only gives him more brownie points. Plus, Mr. Alger and Windrider speak well of each other, which in turns recommends us readers to like both of them all the more.