What is the function of this small hole on the B737's hydraulic reservoir line?
Answering based on ATA 49 system, B757/767 APU Surge Control Valve muscle air plumbing.

Some pneumatic sensing and pressure systems have a moisture bleed hole to prevent icing in the system.  They are typically located at a low point or bend in the line to allow water to escape the system while maintaining pressure.  If the hole gets plugged it can prevent moisture from escaping and ice to form in the line.