is a bulge play.
It is a hane play, backed up by the marked stone already in place to form a V. Black gains great power locally, this way. Therefore the point is the vital point here: if White takes it instead Black would start to worry about cutting points.
Locally, bulge play completes the shape of the tiger's mouth or hanging connection.
White should by all means play here. (See Anti-bulge.)
Once White has played the bulge point, sets up the cuts at a or b, either of which may be a good tactic. (See Bulge/Discussion)