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Pam says: The little hole is for threading gimp or a small cord through, which you would then stitch over. It is called a "cording foot".
(misskhaki at home.com) (Cathy) writes: Dan, This foot came with many machines. The description from the Singer 500 manual describes it: "This light flexible foot is designed for satin stitching. It provides maximum visibility and allows closely spaced zigzag stitches to feed evenly. It is ideal for accurate placement of satin stitching in buttonholes, monograms, motifs and applique work. The eyelet on the left side of the foot accommodates a filler cord."
Linda Westbrook (westbrook at QNET.COM) writes: 161612 Presser Foot for Applique Work Singer Sewing Machine model 328
Margaret (rob.hearing at ntlworld.com) writes: This foot (with the same number on it) was also used on Singer 348 sewing machines. The description of its use in the 348 manual is very similar to the one given by Cathy.