Melted tail light?

So I was driving behind my wife with her 2012 Audi A3 TDI and noticed one of her lights was out. On closer inspection it appears the light works but the housing is melted. Now there are working bulbs in there but isn't the surrounding ring on the tail light LED? That is the area with the funky bubbles and what appears to be melting. What is going on here?

wow.. weird.

Here is a night time photo. Yes, weird. I know I am going to need a new light but what happened? Isn't that an LED?