Its just stuck down, yes the air has crossed a seal into an area it shouldnt be, they sometimes do it, mine did it about a year ago, though a different fox shock, a septune, my mates triad did it too, you need to remove it from the bike and let the air out of it, then unscrew the air chamber it will make a horrific bang and scare the shit out of you, then just clean it all out inside the air chamber and re assemble using for fork or shock oil liberally inside it. A vice helps, but I did one trailside once.
I think you can get a more grease like lube to put in it, but I just use fork or shock oil now and do it fairly regularly as it helps the seals and shock shaft last. I didnt have to do anything else to mine and its never had to be sent off.