It’s a safety valve to keep the tank from rupturing if the pressure gets too high. It’s commonly referred to as a Temperature and Pressure Relief Valve. It should have a tube extending to within 6 inches of the floor so in the event of it discharging it would not hit you in the chest or face. When the homeowner does the install of their own water heater this ‘downtube’ usually never gets put on because it does not come in the box with the water heater. That extra trip to Home Depot for the tube never seems to happen and then the missing part gets flagged on the home inspection when you go to sell.

Occasionally, I’ll see a few drops of water at the bottom of the downtube. This moisture should not be there and it means water is seeping past the relief valve’s seal so it will need to be replaced. This is a simple fix many people are afraid to try mainly because they are not familiar with this valve. They do sell them at the big box stores and you’ll need to drain the water heater down past the valve and unscrew it and install the new one. It can be a DIY for about $30.00 or you can pay a plumber a few hundred to do it.