That's your circlip-check hole. If you take your final drive off, but forget to put the O-ring circlip back on, it will drip from this hole. It will also drip from this hole if the circlip breaks. A broken circlip is a dangerous situation. Your back tire will just spin in place even with it in gear. You can check the circlip without having to pull the back tire. Put the bike up on the center stand and with it in first gear, see if you can rotate the tire. If it rotates, even if just slightly, the circlip is worn and you will need to replace it.
Dianna - do I get another Biff?