The thermostat housing gasket is a seal that is used to prevent coolant leaks where the thermostat housing connects to the engine block. This gasket is typically made of rubber or cork and ensures a proper seal when the thermostat housing is bolted onto the engine. A faulty or worn out thermostat housing gasket can lead to engine overheating, loss of coolant, and potential damage to other engine components. It is important to replace this gasket if there are any signs of leakage or wear.