What Kinda Error Is This?

Looks like it was once an encased nickel, a "lucky coin" piece

Whatever happened to it had to have happened after the coin left the mint.

Can you show pictures of the obverse and reverse? Also, what is the diameter in relation to a normal nickel?

If the diameter is smaller than a regular nickel then it was certainly altered post mint. A partial collar strike can lead to a coin having a rim with two diameters, a normal sized portion and then a larger diameter that sticks out. A partial collar occurs when the collar(steel plate between the dies that determines diameter and give a coin reeding) does not fully engage and cannot fully contain the coin between the dies when struck. The planchet expands beyond the collar to form a part of the edge that sticks out further than the rest. The collar can be tilted or flat when it malfunctions and when flat will lead to a partial collar error commonly referred to as a "railroad rim"- it would have a similar appearance to your coin expect the part of the edge on the obverse would be of normal size and the edge next to the reverse would be larger than normal. When the collar does not engage at all, the result can be a broadstruck coin or an off center.

It's intentionally damaged after it left the Mint. It is not a mint error of any kind.

Thanks,
Bill