That is burr knot. It is the tree creating a place from which it can grow
roots if needed. It is uncommon in selected apple varieties, but there are some varieties that are prone to it. Many rootstocks get it because they are selected partly for their rooting ability. One of the goals of breeding apple rootstock is to select varieties that
root easily, but do not tend to form arial burr knots. They can be a problem. They tend to get larger, not smaller and can disrupt flow of nutrients up the tree, causing stunting or weakness. They can be cut out, but that is best done when they are very small. I have a
video showing cutting them out of an already established tree, where it seemed like they would be
enough of a problem that it was worth opening the trunk to probable infection to get rid of them. I haven't looked at it in a while, so I'm not sure how it turned out. Removing burr knots that size is rather traumatic though. It might be better just to leave them. Another common problem is that they can create a good place for borers to get in. What is the variety, or is it possibly a rootstock or seedling?