the pipe is the hub breather, the breather goes from the hub, into the axle, into the torque tube, and up to the top of the torque tube and out. (early 406/416's had the breather go into the gearbox it self and then out, i assume they stopped doing this due to the manufacturing costs) if the flexy hose is not connected, which they often are missing, or loose, then muck and water can get into the hub and cause damage, as part of the weekly check over this pipe should be checked.