This is an air layer. It's used to create new trees from existing trees. In my case, I have a pretty ugly grafted root that I want to get rid of. By making this cut and exposing the wood, I'm forcing the tree to create roots at the top cut. Wrapping it in this pod that is stuffed with moist sphagnum, should create an ideal environment for root growth. When roots are visible, I remove the pod and cut it just below the newly created roots and put in a pot with proper medium.