It's surprising, but nobody guessed it.
If you can't tell, it's a cup cosy. Duh! In the coffee culture of Canada, where nobody makes a pot of tea and everyone drives-thru Starbucks and gets a cardboard cup of mocha chocca half caf double de-soy milk chai with a twist of lemon, to drink during the ten minutes before they hit the next Starbucks, the cup cosy is king.
This comes from a really neat knitting book that has lots of patterns that use just one ball of wool to make something (or several somethings, in the case of the cup cosy; the book estimates about five per ball). However, although the cup cosy is indeed an ideal little piece for practising following a simple pattern, and for feeling a sense of accomplishment at completing something, I have got to ask:
For one thing, if you are environmentally conscious enough to want to avoid using one of those disposable cardboard cup sleeves that prevent you from burning your hand off, presumably you are someone who is also environmentally conscious enough to buy an insulated mug (as seen above modelling the cup cosy). And if you accidentally left your insulated mug at home, and had to get a cardboard cup at the drive-thru...surely you would no more have remembered your woolly cup cosy (I imagine it sitting on the counter right next to your freshly-washed insulated mug, and possibly also your packed lunch). As far as I can see, you're either all thermos or all cardboard, and there isn't a handy gap in between for the woolly cup cosy. It's got to be the most redundant piece of equipment on earth.
Still, they are sort of fun, aren't they?