Yes, that is the replaceable bearing ... the needle bearing. (You will note that the actual wheel bearing is around the needle bearing. These wheel bearings are sealed, and you cannot remove them. Many people on this forum, including me, had to buy entire new hub assy's because of wheel bearing failure.

The needle bearing (the bearing with the small cylindrical rollers) just pops out of there. You have to get behind it with the edge of a tool, and pull it out. Generally, you use an internal bearing puller for these jobs .... like a pilot bearing puller. I have a little hook that attaches to a small slide hammer that I use... kinda like a seal puller. Reached in there to the back of the bearing, grabbed the back of it with the hook, and it pulls out.

Mine came out very easily, and went in just as easily ... 2002 F250. If you can't get it out, AutoZone or Advance Auto may will probably have a tool to lend you for free. And people on this forum may know little tricks.

And, yes .... they get flat spots. If so, they need to be replaced, not repacked. Next thing would have been damage to the axle end.

Often, when the needle bearings are failing, you will hear a noise when the hubs are NOT locked in. When you lock in the hubs, the noise will disappear.

If you are going to buy new needle bearings (they are cheap), you might think about buying any large o/rings you saw while taking the hub off, they are easily damaged.

good luck.