This is the drain tube for the Temperature and Pressure Relief valve (TPR) installed on a water heater. The TPR valve is a safety device. The drain pipe MUST NOT be smaller than the opening on the valve, which is normally 3/4" in residential applications. The builder used PEX pipe, which is okay, but the initial fitting reduces the drain to less that 3/4" and then, the pipe is reduced to 1/2" on the down leg.