That's the top of your damper rod, and I have never seen so much as a nick on one before myself. That is bizarre.
If it broke into chunks it could certainly jam up the telescopic action of your fork, obviously a bad thing. You might get away with welding it up, replacing that oil control ring in the groove, and ride on but I'd imagine you could find a junk fork with a nicked up tube that nobody wants, buy it, and find and a pristine damper rod within if you look around.
