While I was doing the replacement brake hose on the right rear brake on my 1994 Mercedes E320 Wagon, I noticed two wires (electrical?) sticking out on the brake caliper. Is that part of the whole caliper or a separate part that connects to the caliper? and needs to be replace? Or stick the wires inside the part? See the picture circled in color red. Any comments, suggestions, feedback or advice is greatly appreciated.

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If that were my SD I would say it is the brake pad sensor which wears down as the brake pad wears and eventually lights up a brake error light. You generally put in new ones when you replace pads but the old ones can be reuse if you are careful removing them.

But mine is '81 so I could be off base.

Brake pad wear indicator. The wires are broken. The wire shiuld have a end that snaps into the brake pad with a plastic molded end. https://www.pelicanparts.com/More_Info/1405401217.htm?pn=140-540-12-17-MBZ&gclid=Cj0KCQjwpv2TBhDoARIsALBnVnnHGYKysWFNtA1lT51Em5WA8omgJ7wk6hYMh1EHWmPnej5Mph9jUcsaAjq7EALw_wcB

HGV and tyl604. Thank you both for your posts. I appreciated it. I found 3 spares of brake pad wear sensors located in my cabinet along with brake pads spares as well. I must have forgotten where I put them since it has been quite awhile since I was working on the brakes. Great!