It's rotting from the inside out in an area above the lower welded on bracket where the frame rail kicks up. Dirt builds up and holds moisture in areas like that. The weld appears to be mostly intact but you have rusty, crusty, flaky metal at the lower edge of the hole. These are things that most any body guy would recognize. Maybe there is a crack there I'm not recognizing or maybe there was some collision damage(Broken sway bar) that caused some frame flex and the rotted frame section to fall out. You really need to dig in but I think if you wacked it with a pick hammer to test some integrity you'll find the hole gets much larger and needs metal replacement. Just trying to weld it, it's going to continue to deteriorate adjacent to the areas you welded. Just welding it up you might make it better cosmetically but not much structurally. Replacing the piece with a used section as I previously suggested also gives you the opportunity to get inside the rail and take some rust preventative measures and any repairs should be followed with some type of corrosion protection such as cavity wax inside the rail.
A repair piece should be the same thickness as what's there so that may be pretty difficult to hand fashion.
