Assuming you are talking about the V6, the piece you are referring to is actually two pieces. A smaller plug (with the 3/8" ratchet opening) is screwed into the larger filter housing.
The reason to removethe smaller plug first is that it is designed to help you drain the oil from the filter without getting oil all over.
When you put the 3/8" ratchet into the opening, the small circular plug should loosen and come out. With your new fliter element you will get a small plastic pipe. Push the pipe up into the opening and it snaps in and oil drains through it emptying the entire filter. When the oil has drained, pull the plastic pipe out. Then, use the larger 65-67mm filter wrench to remove the large filter housing. After cleaning it out, put in the new filter element, coat the new O ring with oil and install it in the groove on the large filter housing and reinstall it by turning it in by hand, then when it tightens, torque it to the right amount. Then coat the small O ring with oil, put it in the groove in the plug and reinstall the plug by turning it in by hand, then when it snugs up tighten it up with the ratchet.
Some folks, myself included, have found that the plug gets stuck and putting the ratchet into it loosens the whole filter assembly, which is quicker, but results in a gush of oil as it comes away from the engine.
2010 RAV4 LTD V6