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It is called a venturie. The end of it should be above the water line. It will introduce atmospheric air into the tank. They can cause lots of extra bubbles in the water colunm.
Your question about the tubeing has been ansered but from the picture it looks like the power head is designed to be used with a under gravel filter or a sponge filter. I think adding a sponge filter to the p.h. would be a good idea.