It's best when it's placed on top of the anal rim, because then it really resembles a clit, making the asshole look like a tiny cunt.
Some find it pretty cute, calling it mini-cunt or baby cunt. Others find it a bit gross.
The nob is usually pretty sensitive, but not necessarily in a bad way. During anilingus it may even increase the pleasure. If the rimjob is done well, it can even lead to orgasm, hence the second reason why it's called an ass clit.
It doesn't always work, especially if done too often. But we've noticed that if done like once every 2 weeks, the effect is most intense (usually I can feel when I'm 'ready' for it). My wife also loves doing it, as she enjoys my reaction when I orgasm. She says the spasms of my body are similar to a woman's when I orgasm, which turns her on. I off course love it as well, as not only is the anilingus itself very pleasurable, but the orgasm is at least twice as strong as my regular one.
So, if good hygiene happily meets open minds, such a nub is no drama - nothing to be ashamed/frustrated of - but a genuine anal clit! Learn to enjoy it! ;)