It connects the breather hose to the fuel pressure regulator. If it's yellow, I'm not surprised that it cracked. It should be closer to white. You can purchase it from the dealer by the meter. It's fairly cheap. Your engine will run fine without it, but it could cause fuel to leak onto your engine.
I broke mine also and haven't replaced it yet, although I keep meaning to get over to the dealer to buy the hose.
Oh, it's a vacuum hose.
1988 560SL Black/Palomino
1988 300SEL Black Pearl/Burgandy
1984 500SEC Anthracite Grey/Palomino