This is a stanhope; sometimes called an optical bijou. It was invented by René Dagron in 1857, and it’s a device for viewing microphotographs: detailed pictures no bigger than the head of a pin (1 square millimeter). Popular in the late 19th Century, these tiny scopes were, in fact, all the rage at the 1859 International Fair in Paris. They were often incorporated in rings, pendents, watch fobs, and one industrious instrument maker even mounted them inside violin bows. The images, predictably, were often of tourist attractions, historical cities, religious sites, and portraits of royalty (or, as in the case of the luthier, of famous conductors).
The example here is in the shape of a spyglass, made of ivory; it is, of course, very small—smaller than an British pound coin. I believe the image of a popular pantomime star of the era; the word “SILLY” below the portrait probably refers to the tradition in the United Kingdom of men playing the “dame” in this traditional yule-time theatrical show.