This is an early 18oo's Welsh yarn holder with integral chain. These are rare pieces. The idea was  to hold a ball of yarn (a clew) and let it unwind smoothly while knitting.
It kept the yarn from rolling on the floor, getting dirty, or tangling — especially useful when knitting while walking, herding, or sitting by the fire.
The open cage section (the long rectangular frame) is where the ball of yarn was placed.
The cage kept it loosely enclosed but allowed the yarn to unwind freely through the open sides. The carved chain and swivel joint acted as a hanger or tether.
It could be hung from a belt loop, apron tie, or chair arm, or even suspended from a wall hook or spinning wheel frame. As the knitter pulled the working yarn, the ball rotated or shifted within the cage, letting the wool feed out gently without snagging.
The swivel helped prevent twisting of the yarn as it unrolled.