You don't say if it was the urethra, but if it was, be sure to watch and if it does not come out, embarrassing as it might be, see a doctor. You really don't want it to get sideways and block your ability to urinate.
Thanks for the help, guys. I feel a lot less worried now. I won't use pencils anymore, that's for sure.
It should come out, if it's in your vagina. Heck, if it's in your butt it will probably get pooped out, and erasers aren't big enough to obstruct anything. If it's in your vagina, you can fish it out with your fingers. Next time, don't use a pencil (not sanitary, apart from the eraser issues). If you can't get a dildo, put a condom over whatever you end up using to keep germs away from your sensitive bits, and to prevent any other events like this from happening.
It will come out, unless, of course, you were masturbating in a tube like the urethra that is so tiny that the eraser could get stuck. But if you were masturbating in an orofice that has lots of room for the eraser to come out, it will inevitably come out.