Shaggy, somewhat incomplete...Hacker is closer.

The Boundary Layer starts at the leading edge of any aircraft or its surfaces. There is some complex math involved, but essentially, the boundary layer gets thicker and thicker as you move aft. The speed of the air in the boundary layer is supposed to be zero at the skin, and increase until it reaches your true airspeed as you move away from the skin.

The gap is the "Splitter Plate," and is supposed to keep the intake in free-stream air, instead of being mixed with some slow-moving boundary-layer air (which would make it turbulent).

The splitter doesn't 'retract:' the leading edge is fixed, and the portion at the front of the intake-lip moves out to partially close the intake at supersonic speeds. (So you could say it "Extends.") By reducing the area air can go in to the engine, it then expands behind the intake, and slows down...to subsonic speeds. Jet engines don't like supersonic air.

You will see this gap on any fuselage-mounted engine (MD-80; F-15; F-18, F-16). The Hornet and Viper have the gap "above" the inlet, but the concept is the same.