I recently changed out my thermostat

Really hard to make out the photo, too zoomed in, but it looks like the top of the valley, below the intake, so technically not inside the engine block. If that is the case, then this could be the "valley stuffer," which is a foam box and sits in the valley between the heads and suppresses the noise of the intake. It was done away with in later motors. Non OEM intakes won't even include it. Google results show a lot of complaints and confusion over this foam and plastic enclosure with the OEM intakes. Most people just throw it out. It's noise suppression is questionable and it can retain moisture. (Edited to add: it may be referred to as a foam insulation shield, so maybe it's also designed to keep the intake cool from engine heat.) Even so, lots of complaints about them falling apart and leaving broken plastic and foam sitting in the valley, as you have in your case.

I’ve done a complete rebuild of the timing system of this engine over the last summer and noticed the same thing. It was really torn up and just decided to remove it. Hasn’t had any problems since.