I think it is a form of decay. It may have been fallen wood or wood that was blown down in a storm. I try to stay away from fallen wood when I can help it. I once made 3 bows that should have been decent, if not very good, from an osage tree that was blown down when hurricane force winds blew through Indiana back in '08. Not one of the 3 bows survived to shoot-in stage. 2 blew up in final tillering without even lifting a splinter first. Like PatB said, I would not use that billet for bow.
CP