Why should this be included in the repository? Useful to create virtual video devices. I personally use it and it works fine.
Is it Open Source (yes/no): GPLv2
Link to source tarball/zip file: https://github.com/umlaeute/v4l2loopback/archive/v0.10.0.tar.gz
You can edit a stream and output it to a virtual webcam. TrucklistStudio/WebcamStudio both use it, for instance, to create the virtual devices.
To quote the programmer who made it:
this module allows you to create "virtual video devices" normal (v4l2) applications will read these devices as if they were ordinary video devices, but the video will not be read from e.g. a capture card but instead it is generated by another application. this allows you for instance to apply apply some nifty video effects on your Skype video... it also allows some more serious things (e.g. I've been using it to add streaming capabilities to an application by the means of hooking GStreamer into the loopback devices).