It is a set of huge teeth that SpongeBob puts in his mouth for eating hard food or for fun. It can be found in most boxes of Mermaid Man and Barnacle Boy Bran Flakes. They can possibly be fake teeth, which are called dentures.
Role in episode
Only SpongeBob is known to own these, but Patrick probably does too. SpongeBob likes to use them while eating the cereal in his special Mermaid Man and Barnacle Boy bowl, while watching the Mermaid Man and Barnacle Boy show on Saturday mornings.