Coming from the top of the Transfer Case, and going... Where?

Nowhere.

That's a breather hose. It's open on that end to allow air in/out, but it's on a hose mounted up higher in the engine bay so that it doesn't suck in water.

You sure it's going to your transfer case and not to your front differential?

Well that explains why I don't recall pulling it out of anything. Thanks! Its definitely coming from my transfer case.

I'm just finishing swapping the engine and transmission at the pace of an hour or two every other week for 3 months, so now that I'm putting everything back together, I have forgotten how it was before and am just making sure everything works (zip ties galore for hose and electrical routing). This was one of a few little mysteries. There may be a few more as I finish up.