What does 回 do in 这回事?

回

[6] (measure) time (as used to indicate number of occurrence)

[7] (measure) piece (as used for happenings or events)

回 is a measure word for event or occurrence ; 这回事 means "this (piece of) event" or "this (time of) occurrence"

Different between 回 and 件 as measure word is:

• 回 measure specific course of events (how many times it happens)

• 件 measure event as an unit (how many of it exists)

就是这一回事 = it is this occurrence

當沒有这回事 = pretend there is no such occurrence

~

就是这一件事 = It is this event

當沒有这件事 = pretend this event doesn't exist

We also say 这回战斗(This battle) or 这回会谈(this discussion) ; but not 这件战斗 or 这件会谈.