What is this tool in my sewing kit?
It's a seam ripper. You use it to pick up and cut stitches in a seam that you want to "unsew". 

To use it properly, poke the longer end under the stitch, then push it through so the U part cuts it. Repeat every few stitches, then use either your fingers or the tool to pull out the threads.

To use it the quick &amp; dirty way, pull apart the layers of fabric until you can see the stitching on the inside, position the U part of the tool at the bottom of them, and push up between the layers of fabric to cut the stitches. You'll need to hold the fabric taut while you do this, and there's a danger of cutting the fabric instead of the stitches (hence the "proper" but tedious instructions).