That is what we call the pinion seal. While it's not hard to replace, doing it wrong can cost you a rear end rebuild. Removing and installing the seal is easy, but retorquing the nut is where the problem lies as there is no torque spec for it. You are supposed to measure the rotational force that it takes to turn the pinion with a inch pound dial torque wrench and then when you reinstall the nut you tighten it until you reach that reading or the preload torque for the pinion bearing. If you overtighten the nut you have to replace the collapsable spacer inbetween the pinion bearings or you run the risk of burning up the bearings, if you leave it too loose the bearings will fail.
All in all a easy job but I recommend you leave this one to the pros.
