What the heck is that stuff?

It looks jelly like~with what looks like a tubular protrusion on top and bottom.
Not sure if these pic's will help but....the rock it's on if full of star polyps

Looks like a sponge of sorts to me.

looks like a sponge of sorts to me too..need it to grow out some more for a identification..your water must be pretty good from what i hear you need almost perfect water to keep sponges.. but i could have been mis informed..

Rick

+1 on the sponge. Def a good thing to have in your tank. Nice color on it...hopefully it keeps that color when it matures.

I'm on board with the sponge!

I got a sponge~I got a sponge~na na na na naaaa!!!

I agree with sponge

How do it just appear like that?

starts a a spore and grows it is a good sign that your tank is maturing

live rock if its from the wild will contain thousands of critters. you can make base rock become live rock but it will not give you all the neat little things that you will get from wild live rock (unless its stored in the same water colum as wild live rock)