Tie rod end boot, inside is grease to keep your tie rod end lubricated. When it breaks or gets torn the grease usually escapes, allowing dust and debris to enter. You'll probably want to replace it pretty soon (You can sometimes buy just the boot and replace it, but you're probably better off just buying a new end as who knows what damage has already been done... could be none, could be some, but the part itself really isn't too expensive usually). You can count the turns when removing it, and put the new one on the same about of turns, essentially not affecting the toe portion of your alignment. However, a wheel alignment is usually recommended after replacing such a component. Good luck!
Michael