That is mechanically separated chicken, it's what all processed, pressed chicken products are made from. Unless it say 'whole breast meat', it's the formed slurry.
From Huffington Post:http://www.huffingtonpost.com/2010/10/04/mechanically-separated-meat-chicken-mcnugget-photo_n_749893.html
UPDATE, 10/4/10: The story has been amended to reflect that although mass produced chicken nuggets at large may contain mechanically separated chicken, McDonald's famous McNuggets no longer do contain "mechanically separated poultry as defined by the federal government. The USDA now requires foods with mechanically separated poultry to be labeled as containing "mechanically separated chicken or turkey" in their ingredients lists.
Additionally, although "mechanically separated meat" may apply to turkey, chicken and pork, due to concerns over BSE, the federal government has held since 2004 that mechanically separated beef "is considered inedible and is prohibited for use as human food."
UPDATE II, 10/5/10: Although the original source of the photo is unknown, there is little reason to doubt that it is not mechanically separated poultry or pork. For example, on his recent Food Revolution show, Jamie Oliver demonstrated a version of the process ("how to use all the leftover bits to make food"), by hand, to kids, in a failed attempt to scare them away from the mass-produced foods that such meat slurries end up in (failed, because the children still wanted to eat the resulting chicken nuggets despite his demonstration). The chicken slurry he made before their eyes bears an uncanny resemblance to the passed-around photo: