It is a bearing retainer cover, sometimes referred to as the input shaft cover. It mates to the front of the transmission inside the bell housing and is where the throw-out bearing sits. The clutch fork then slides the bearing on the snout of this cover, which then applies pressure to the pressure plate diaphragm, engaging the clutch. It is a very important and often overlooked piece.

The reason you should replace this is because of the bearing design flaw on the 86 platform. Toyota has revised the bearing on these cars, but the problem still persists. The bearing tends to go out pretty quick on these cars and because of that, ends up scoring and damaging the snout on this cover. So if your bearing retainer cover is damaged, replacing the bearing by itself won't do much for you and you will end up revisiting the same situation. It is for this reason that we always recommend replacing both simultaneously.