Well turns out it has a name - Henry’s pocket!
Also known as a cutaneous marginal pouch, Henry’s pocket is common in a few animals but most noticeable in cat and dogs with erect ears.
It’s unclear what it’s for, however, it might help these mighty listeners tune in to high-pitched sounds.
One thing is for sure - parasites love to hide away in this warm patch of skin, so it’s important to check the Henry’s pocket for any stowaways!