The Hole is located around spawn. In fact, the spawn point is directly on some grass used to cover up The Hole! Epicanna27 actually spawned in the hole and had to op herself just to use creative to get out.
The Hole is mostly used when running low on hunger or health and you are too lazy to either eat or wait for regen. There is a cave system underneath The Hole and if you swim down the waterfall within, you can explore the system. Once within, it is quite hard to escape. It's advised to either use /kill or dig underneath the gravel patch if you would like to get out. Teleporting to someone outside is a good way out, too.
It was the spawn point of server owner epicanna27. Later that day, she began to patch it up with dirt, but did not finish as it was being used for jumping down. Even later, late into the night, Nyleve1123 found gold in the cave system and mined it. Epicanna27 also discovered the gravel patch and used it for suffocation once.
The Hole is dying off (no pun intended) as a top way to die as it is falling to /kill. Additionally, a top reason to die is to return to spawn, and if you are close enough to The Hole to jump down it, you're around 10 blocks from spawn. However, once exploration has grown and people live farther away, people near spawn may want to jump down so they can return to their bed point at their far-away home. (The command /home is also being added, so that is likely not going to happen.)