What is this and what exactly does it do? When I take off the rubber plug I can feel the vacuum.

 

Mine has a vac line running off of that port back to EGR valve. Look at the emissons sticker for the vac tube diaghram and it shows it (if you still have that label under the hood) Maybe you can save this image and zoom in on it enough to see the emissions label

 

duck hit her on the button, on mine that goes to the opti, but then mine is modified to a vented opti. shbox shows it as a egr vacuum source.
http://www.shbox.com/1/egr1.jpg

 

I hope mine looks that pretty when I get it all back together!

 

Is it suppose to be like this?

 

If it is a factory setup yes but if someone has modified your car, then it would depend on what they done. Like craby post, his is changed because of the vented opti.

 

not sure on the 96, 95 would need a hose to the solenoid.

 

Some 95's were vented, as mine was/is.

 

what solenoid

 

look at the picture here,
http://www.shbox.com/1/egr1.jpg