How to fix hose bib?

Question

I have four hoses at my house and they all failed over the winter and started flooding the house. I'm going to fix them one at a time.
I've unscrewed the first one and pulled out this:

I expected this piece to have a hole in it, but it seems solid. I don't have the slightest clue by what principle it opens and closes the flow of water.
I then cut a hole in the ceiling and found this:

The brick is about 2 feet away so I'm not really able to reach it. I would appreciate any advice on the steps I should take to fix this problem.
Edit: to answer the questions asked in the comments:
The hose was not attached. I live in Philadelphia and I believe it got below freezing, There is no insulation in that crawl space. There is no rupture in the stem. I'm not even sure where the water was coming from but I'll investigate by carefully turning the water on.
UPDATE: Video of the leak.
UPDATE 2: Managed to disconnect the pex and pull out the assembly. The following is a picture of the rupture. To me, it looks like they used type M copper, doesn't it? I thought that M was against code.

JACK · Answer

You are looking at a sillcock. The piece you removed goes into a larger pipe and the actual valve is at the end of the pipe, inside the house. When you turn on the water, the valve at the end opens up and water flows through the pipe and out.
You should be able to remove and replace the entire assembly simply by turning the outside spigot counterclockwise and getting one the same size. You might be able to get replacement parts from a plumbing supply store.
The below picture illustrates a normal spigot and then a sillcock installation.

DaveM · Answer

That is called a Frost-Proof Sillcock.
The part you removed is the valve stem.  The end of that is the actual valve that opens to control the water.  The seat is designed to be inside your basement so as to less likely to freeze in the winter.
That also means that it is connected to your indoor plumbing at the brass connector I see in your second picture.  Whoever installed it, must have been able to reach it.
If it's not leaking on the inside, then you may be able to just replace the valve "washer" (that conical thing on the end of the stem) and/or packing.  You could try taking it to a plumbing supply and see if they have a compatible seal.
If you google this term you'll find a couple videos showing how to install them.

How to fix hose bib?

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