Dogs actually have three eyelids; the upper, lower and a third eyelid which is called nictitating membrane.  The nictitating membrane is a thin, opaque tissue which rests in the inner corner of the eye, below the lower eyelid.  The purpose of the third eyelid is to offer additional protection to the eye and cornea and also spreads tears across the eyeball surface.  Most animals, except humans and pigs, have a nictitating membrane. 

In most cases, the nictitating membrane remains retracted and is not visible.  When it becomes visible, this is usually because the eyeball has sunken, and may be an indication of illness or of a painful eye.  You can sometimes see the third eyelid when your dog is relaxed and falling asleep. 

In some dogs, a portion of the third eyelid is always visible and this condition is called haws.  For some dogs this is normal. 

If the membrane suddenly pops forward, this condition is called "cherry eye" because it looks like a small red cherry on the inside corner of the eye.  The correct term is prolapsed bland of the third eyelid and when this happens, the supporting cartilage of the membrane fold over and the third eyelid loses its function. 

If you note any sudden change in the appearance of your dog's eye such as redness, cloudiness, ocular discharge, squinting, rubbing the eye, change in vision, protruded third eyelid, you should set up a visit with your veterinarian.