Double berth
Yup, that cusion is what makes up your double berth.
Under the table you will find black knobs at the top of the two aluminum support poles. Loosen the knobs, and then pull up smartly on the table and it will come free of the poles (or the poles will come out of the floor). Then remove the poles and store them out of the way. Then take the three cusions that make up the port seteee and tip them up on edge to get some room to work, and you will see that the table fits into the opening between the top rim of the settee and the mast. Put the three cushions back in place, and wedge that extra cusion in the vacant space to creat your double berth. You don't need fiddles really because the table rests on top of the lip of the settee.
On some of the 38s there is some settling of the floor that has been discussed at length elsewhere on this board. That same settling can make the fit for the table quite tight, as the settling can push the inboard edge of the port settee a bit closer to the mast than originally designed. Which can make the fit for the table top very tight and difficult. The solution to this problem (if your boat has it) is to remove the fiddles from the bottom of the table (which I did on mine) which are there to keep the table centered in the opening. Don't worry, as you don't seem to need those underside fiddles for it to work well.
This bunk is by far the best sleeping location when underway on the 38. We never mounted a lee cloth, but found that a couple of wedge cusions worked well to wedge the off-watch crew up against the outside cushions. (A lee cloth on the starboard bunk would work better, but you need access to that bunk to use the nav station.)