The noseflute is, as you've probably guessed, a musical instrument played by blowing into it with the nose. It has a very long history, although in modern Western culture, it's mainly a novelty.
It's unclear where it originated, although I would guess that it arose in several places independently: its concept is fairly simple. For a long time, it's been most common in the eastern hemisphere, particularly the southern portion. I've been able to find specific reference to Pacific islands, including the Phillipines, New Zealand, and Hawaii, as well as southern Africa.
Grove's musical dictionary cites a book by a Mr. C. Sachs, in which the author puts forth the idea that nasal afflatus has magical associations, and the noseflute would have found its first use in religious ceremonies.
Several varieties of noseflute exist. Many classical noseflutes are shaped like a long pipe and held perpendicular to the face. They're generally made out of bamboo. Several holes were bored down the length of the pipe that can be covered or uncovered to change the pitch and tone of the instrument.
The humanatone, a modern noseflute, is usually made of plastic and has a shape that reminds me of a fingertip bandage, or perhaps a propellor airplane. Here's a crummy ASCII diagram:
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You put the top part against the bottom of your nose, and hold the lower part over your mouth so it forms a seal around the edge. By blowing out through your nose, air travels down and out through the bottom hole. The mouth actually works as a resonating chamber for the humanatone, so you can change the shape of your mouth to change the sound coming out of the musical instrument.
Of course, one of the largest problems with a nose flute is hygiene. With older bamboo noseflutes, you can always carve a new one when you need it, but with new ones, it's important to clean it and not to share it, except with people you love very much and are willing to share diseases with.