Its a breather tube for the rear end. You can hook a hose to it run it up a little and mount it under the body with a check valve on the end of it so it can let the pressure that build in the rear end out. If you block it off you will blow oil out of all kind of places on your rearend. Or you could put the cap back on making sure it is secure where it wont fall off but loose so it can breath around it.
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