I've seen so many people add something made of plastic in the sound hole of a guitar, but I don't know what it's called. So what is this and why do they use it?
I can think of two different things.
First, a "sound-hole pickup", a device that allows you to mount magnetic pickups onto/into a guitar so that it can be amplified without using a microphone.
Second, feedback suppressor -- a device that dampens the resonance of the guitar so that it does not feed back when being played at high volumes. Sometimes these are just called "soundhole plug" or "soundhole damper" or "guitar damper" etc.