That appears to be the inner axle seal. It goes into the axle tube somewhere from 2-3" from the flange.
It's best to add a ring of grease or gear oil to the inner part that rides on the axle shaft before assembly to keep it wet until the gear oil sloshes onto it.
Getting the original out isn't all that hard but getting the new one in takes care unless you have the proper seal installer tool. Push it into the housing until it stops, then tap it in gently side to side then 90 degrees off with a drift or 1/2" socket extension until you feel it firmly seat all the way around.
[EDIT] The side shown in the photo faces the wheel side.
As was said earlier, be sure to pack your bearing well and even add a small blob into the tube before sliding the axle back in.
Oh, and be sure to top off the gear oil in the housing! The be absolutely sure you have enough, jack up one end, then the other to allow some gear oil flow outward to the seal, set it down and fill to the bottom of the fill plug
Good luck!
Jim