If I was a betting man, I'd suggest that it's a low-melting-point alloy such as Wood's Alloy designed to melt and open the circuit from the thermopile (thus closing the gas valve) in case of a house fire or fire under the water heater, but I have no evidence to support that premise!
Possibly 180°C is the melting point.
Edit: Okay, evidence gathered. See Amazon review here,
The funny thing is AO Smith replacement thermo-couples don't even come with the thermal fuse!!! But you don't really need the thermal link, and this generic thermo-couple will work just fine for your water heater (as long as it's the correct length). So measure the length of your bad one and make sure. Because the longer they are, the higher the resistance, and your gas control valve is designed for the correct length.
Finally, if you feel you just gotta have the thermal fuse (cause
your'e afraid you just can't keep the area clean under your water
heater...and dust or debris collecting under your water heater, may
start an un-controlled fire), then for about $20 more, you can get the
complete kit which includes the thermo-couple (with thermal-fuse
link), the pilot tube, and a piezo-electric ignitor.
and this Amazon photo (which is the item referenced in the review).
You might want to discuss this with your repair service company- it appears they may have compromised the overall safety by replacing the original safety device with an inferior generic replacement. It also sounds like the guy they sent out was a dolt- "transistor"!
Best Answer
To me, this looks more like a thermistor than a thermocouple.
Can you measure the resistance across this part? If it's zero Ohms (short), then it's a thermocouple. If it's on the order of 10kΩ at room temperature, then it's a thermistor.
What materials are the wires made of? If they are both copper, then it's certainly not a thermocouple.
Can you describe what was this connected to inside of the unit? If it's connected directly to the microcontroller, then it's probably a thermistor. Thermocouples have weaker signal than thermistors, so they require more signal conditioning.