This seal goes into the transmission bellhousing and seals the clutch release (throwout shaft). If these seals are bad, they let unwanted contaminants into the throwout shaft bushings, causing premature wear and damage to the clutch release shaft itself.
These seals are easier to remove when the transmission case is removed from the vehicle or when rebuilding your transmission. We have found an easy way to remove these is by cutting a small piece of steel tubing in half (a shock sleeve sleeve works). Place the half sleeve on the throwout shaft through the transmission bellhousing and then use the actual throwout shaft to press out the bushing and seal at once.