What is this guage and should I replace my AC unit?

that's a sight glass, not a gauge.

not worth replacing unless you're in a brutally hot climate.

you should insulate the larger pipe outside.

That's a sight glass that is used to determine if the system has enough charge. It should be clear when the unit is running. If it shows bubbles it could mean the refrigerant charge could be low.

Apparently that particular sight glass doesn't indicate whether the system has moisture in it. The more recent ones will show green on a dry system and yellow when there is moisture in the system. It does look yellow now that I blow it up and it looks like a Sporlan unit. EDIT:The dot in the center is the indicator and since it's black, I suspect it isn't active and can't be relied on to indicate any moisture content of the system.

That old unit probably isn't very efficient and may not last much longer but if it's still doing the job, I'd say run it into the ground.

When you replace it, you'll also have to replace the evaporator coil since the new systems use different gas now.

You would notice a good difference on your electric if you put in a new 16 seer system vs what you have. We don’t know where your from so we really don’t know how much use you get out of it. Incidentally the damage to your coils is caused by Fido lifting his leg on it. Don’t know if it’s an old dog or current one. But will destroy a new ac in no time if he’s allowed to continue using it