Note what follows is most likely wrong, munsoned below has the right explanation which I'll repeat here for brevity's sake, make sure you upvote him though. It's a rolled up flap of skin from his leg. My guess is it's rolled up to prevent infections and that's why it looks like a penis. What they do is attach both ends and they slowly cut it away from the leg as it attaches to the hand. It will eventually be severed from his leg.

I am keeping the comment because [deleted] is super annoying.

Ignore everything below this line.

If I had to guess I'd say his dick was cut off or severely lacerated or somehow lost blood supply. Surgeons probably moved his penis to the his leg to maintain blood supply while they patch up his pelvic region. It's probably been attached to his forearm to ensure good blood flow and increase the likelihood he retains nervous sensation.

The scar along his leg makes me think one of his veins has been harvested for use in an autograft to re-establish blood flow to his penis. From the looks of it, it's probably the anterolateral vein of the thigh or maybe a branch of the great saphenous vein.

It's either this or lose it.

And before someone asks how he pees, I am guessing a foley catheter (up your urethra) or possible a suprapubic catheter (through your abdomen) depending on the damage. He's probably covering this up.

tl;dr man's penis has been moved to keep it alive.