It's next to the clutch. The work involved in replacing the DMF involves taking the clutch out too, so usually if you're doing one, you do the other at the same time (minimal extra labout involved with doing both).
If you've got to ask if it's a big fix, then it's probably a garage job rather than a DIY job.
As to why it needs doing, and what it is ... DMFs are put into (mostly) diesel engined cars to absorb the torque shock to the gearbox. Without a DMF, modern diesels can rip apart the internals of gearboxes. So it's a sacrificial part. As to how long they last, it all depends on how the car is driven, and the type of DMF it is. Different manufacturers use different methods of building DMFs. All wear out eventually, but far cheaper to replace a DMF than a gearbox.
Another of the downsides of modern diesel engined, manual gearboxed cars, I'm afraid.
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