That is a baby. The odd blob on his back? That's his brother, a nicely formed penis growing and thriving there. This is a case of fetus in fetu, in which a mass of cells, either an absorbed twin or a large teratoma (a surprisingly well differentiated, but abnormal, fragment of embryonic tissue), form a partial individual fused to a larger fetus. In this case, all that made it was a penis and what looks like some other adjoining tissues.