This hose is used to pull fumes from your engine's crankcase into the engine where they are burned. As the engine wears some of the gasoline washes past your rings and into the oil where it then turns to vapor due to the heat of the engine. In the old days this was vented to the outside of the engine, but in the mid 60's laws were put into place mandating the hose you see here to suck off the fumes for burning.

There is, or should be, a small metal screen or brush looking thing in the hose or the pipe on the valve cover. This is a flame arrestor Mercedes installed to prevent trouble during a backfire.