Why is there a koozie on this bike's chainstay?
That is a "chain stay protector" and it is installed in, let us say, a non-traditional way.  Typically it would be a couple inches forward of where it is.

As the name suggests, the purpose of the pad is to protect the chain stay from wear and damage from the chain, which can hit the stay with a lot of force when riding at high speed over rough terrain.