The hole is the butt end of the threaded hole of the head stud underneath it (look for the stud and nut below).
That horizontal shelf up at the top is the bottom of the valve seat recess and only has a normal wall thickness of about a 3/16" so don't go crazy on it or you will make you a hole at the edge of the shelf ledge that is facing you.
(ie. you just bought you a weld up job or a new head).
Just smooth it out with a dremel flap sander, don't try to reshape the thing beyond 1/16" even at the very edge of it.
No one has ever found even one whole HP messing about with the exhaust port & polish routine ..... so if you must, just smooth it up.
Think about it -- exhaust gas is DRIVEN by the piston and MUST exit. Smooth matters little to it as it will carbon up again quite quickly anyway.
It is the intake flow that must be coaxed in under atmospheric pressure vacuum action. Porting applies much more to the intake side than the exhaust.