View attachment 631652
Look at the grout lines from the adjacent tiles. One of two things happened. Either there's supposed to be a thin strip of tile in between the top of the toilet and the grout line where the next tile begins and this bit of partial tile crumbled away, or (more likely IMO) the toilet was supposed to be mounted higher up, adjacent to the tile above it. It looks to me like the whole toilet has sunken lower than where it was originally installed.
The hole isn't cut/drilled through the wall, it's a gap in between the tile above and the toilet below.