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This is also known as the nictitating membrane. The third eyelid plays an important role in cleaning the surface of the eye (cornea). the Harderian gland, which is attached to the inside of the third eyelid, is part of the tear production system. For these reasons the third eyelid should only be removed as a last resort.
If you look carefully, the third eyelid, in most breeds, can only just be seen in the corner of the eye near the nose. In some breeds it cannot be seen at all and in other breeds, such as the bloodhound, it is obvious.
Protruding third eyelids in both eyes often indicate that the dog is suffering from some generalised illness. A protruding third eyelid in one eye is usually indicative of a problem associated with that eye or it may be a congenital defect. The exposed border of the third eyelid is usually pigmented. Some dogs have the border pigmented in one eye and not in the other, giving the dog an asymmetrical look. This is no reason for concern.