We call it cotton. The function of cotton is to make the males more visible when displaying to hens, especially when rooster is running at a hen he is trying mate with and she might have other ideas. Most consistent time to see the cotton in action is immediately after a dominant rooster / harem master comes of the roost. Generally he is first. He will then mate with each hen in turn as they come down from the roost after he runs at them all balled up looking dark except for the cotton patch. At that time he will gently peck each of his offspring in turn as well.
Below is a rooster using the cotton in a display to a hen in the background. Rooster is of a colormorph where the cotton is reddish-gray rather than white.
It may have another purpose in the ancestral Red Jungle Fowl where the cotton is highly visible while the birds are in flight. Video below is crap but you can almost make out cotton as rooster flies up hill.