Blanket tag masturbation

I have a 4 year old nephew, who, since age 2 has had a favorite blanket. It has a large tag sticking out of the end of it with laundry instructions on it. The first time I saw him do this I was stunned, but his Mother and Grandparents, who he lives with, find it the funniest thing ever.

I will attempt to describe it here. At 2 years old, he would stick the tag up into one nostril, and lightly tickle himself with it, as he moved it around in his nostril, he would "zone out" and get really glassy eyed, and would even have nystagmus, begin to shake and sometimes his eyes would roll upward slightly. He would not respond to verbal or tactile stimuli, almost as if having a seizure. He has continued to do this and is now 4 years old, but now, he sticks the tag in his eye, ear and Lord only knows where else. His body shakes a little during all this as well. I know this SOUNDS like a seizure, but the only time it occurs is then he is doing that with the blanket tag.

The adults think it is the cutest thing ever, and laugh, his Mother will even say to him if she sees him get the blanket out of the bedroom, "are you gonna get you some tag?" I wonder if this is a common thing, and should they be encouraging this? Is it a form of masturbation?