Looks like an adjuster, but I believe those are located at the top, hence the slot for a Phillips screwdriver.  This thing looks like a wing-nut, but obviously made of the most brittle plastic BMW could spec.

Headlight Knob

EDIT:  Apparently it’s for the automatic vertical aiming adjuster that the European spec’d cars came with.  Serves no purpose on US car, so I’m sealing them up with some silicone.