Woodcraft advertised this item.

[LCHIEN]

is it a router bit? or a drill? What is it used for?

[mpc]

Not a drill bit, not a router bit, not a bit at all. It's a piece you glue/epoxy into the end of something (the shank part) so you have a pretty place to run a leather cord through to hang something: it's a lanyard holder! Imagine this epoxied into the end of a kitchen tool or BBQ tool for example. This is the "small" version; Woodcraft has a larger one that is a different shape: imagine the cone/dome portion of this example melting a bit, getting fatter at the base.

Where was it advertised?

Woodcraft link to item in question
Woodcraft link to larger cousin

mpc

[LCHIEN]

Yes, you are right its a butt cap for a wooden handled tool.
My first reaction to this pop-up ad was that it was something like one of my zero flute countersinking bits.

But when I followed the link

I just thought it was uncanny funny. and it was too quiet here. And probably, according to the State of California, it will give you cancer if used within 200 feet of you. They shoulda put a leather tie in the loop hole.