It's how you spell "Porsche Water-cooled" (and for the clever clogs, no I'm not including the hybrids). Or so the air-cooleds would probably say.
It's the Rear Main Seal.
It looks like this (OK that's actually a GT3 RMS, but really you almost can't tell, they are just big o-rings):
And it fits here (picture credits: oz951):
Almost every internal combustion engine has one (at the end of the crankshaft, normally directly before the gearbox, although that is generally bolted to the engine, unless it is a fancy car with a front engine and rear gearbox with just a transmission shaft between).
Anyway, it stops the sump oil exiting the engine via the crankshaft/driveshaft, or at least that is the theory.
Due to the high stresses of a rear engine and weight saving seeming instituted on the water-cooled engine and gearbox (leading to no quite so accurate tolerance apertures and/or greater flex/movement) and the original seals being a bit under engineered, the seal is known (infamous) for leaking.
However, most RMS leak in any car, it's just whether it mists, weeps or fails (leaving a mess and engine failure if you decide to drive off with no oil).
Don't worry though, the new Teflon seals developed over time and culminating in the 997 seals (or even the Cayenne ones if you want really beefy ones) have almost completely sorted the problem.
Early 996 may still have had a degree of extra flex and lower engineering tolerances, so random variations in production may still leave a slight leak.
The upside is that if do loose all your oil in one go (very rare) you will almost certainly notice as you will have slipped over in the 9 litres of oil on the way into the car.
The fact is pretty much every car has had its RMS changed if it has leaked already (or if it had a new clutch, as the part is about £20-£30 and fitted in minutes once the engine-gearbox is cracked open for a clutch).
If it hasn't already leaked and been replaced, it probably won't any time soon as it is obviously a good engine casting, bolting or seal in there. In which case, let sleeping dogs lie.
Most of that diatribe was pretty much tongue in cheek, as it us internet folklaw that is the biggest problem with the "infamous" RMS.
It is almost nothing to worry about and even if you do get any thing up to a few drips on the drive or garage floor it just means wait until the the next clutch is due.
Obviously if it does fail, don't drive and get it flat-bedded to local OPC (or better a good indy) and take the opportunity of fitting a clutch for free ehen they crack the engine-gearbox for the new RMS (obviously younhave to actually pay for the replacement clutch part).