It's the hole on the bottom of the bell housing on my 2002 4.6l auto

 

A little black plug, its circular

 

What's it do/called and is it needed?

 

its an access point for the converter nuts.

 

Well see how you can see the flywheel? Technically a small object could find its way up there, but practically the plug isn't really important. The reason the hole is there is because that's where you access the torque converter drain plug for when you do a trans drain and refill.

 

Not quite, the torque converter nuts are on the other side of the flywheel behind a metal cover that comes off when you remove the two bottom bolts from the bell housing that don't go to the engine block. You can however use that hole to turn the flywheel with a pry bar while you're removing the torque converter nuts.