I believe that is 'air relief tube'. The tube end should be plugged into a fitting near the lower pipe assembly and the upper end, with the white plastic 'knob' should be as near as possible to the top of the filter. The purpose is to provide a way for extra air inside the filter to be removed so allow the maximum amount of water to be in the filter.

Without this you will have to regularly drain excess air from your sand filter...with this properly installed this problem is largely eliminated.