Formerly known as the "eco-friendly bicycling photographer" of Long Beach. I've since traveled 10,000 miles through the US as PathLessPedaled.com. I now find myself in the US bike epicenter - Portland. Join me as I re-enter the working world to save for the next adventure.
Kudos to Okiecyclist and Doug. The tooth-like implement is indeed a freewheel removal tool, a sort of bench vise on the go. You place the freewheel tool on one end, screw in the skewer (hence the threaded hole) and use the other end to grip a fence, pipe, table or even your handlebars (recommended as last resort). Then you simply turn your wheel to break the freewheel free!
Why would you use this tool in this day and age? Well, many still use freewheels. A Phil Wood rear freewheel hub is about 1/3 the price of the cassette hub equivalent and with that you could build a dishless wheel where you don't have to worry about carrying different length spokes for the rear. In fact, you could build a rear and front wheel that use the same exact length spokes.
Among the other interesting tools that Chris carries in his Ur-BikeBurrito are faucet keys. You may come upon a spigot that has been disabled. If you were in a pinch for water and you had these faucet keys you could turn on the water with no problem.
You may also notice a wine bottle cork that can be used as stopper in the bottom of your seatpost where you could carry spokes or emergency cash.
He also carries a small saw and files for on the road machining. Of course, if you're traveling on well trafficked roads with towns every few miles, it might not be necessary to carry all these things. But for adventure touring where you're sure to be puttering along a dirt road, 70 to 100 miles from a small town, these things are good to carry for interesting eventualities.