Agree with others - replace it, but, if you're really interested, the best blow-by-blow I could give is the following:
A) It probably indicates that there has been some prior impact in this area. Bike helmets are made to take up impact and dissipate energy exactly once (in any particular area). This is done mostly through compression of the internal Styrofoam but also through bending and tearing of the outer shell. It could be that, whatever cracked your shell in that area, also compressed the internal styro in that area, reducing the helmet's ability to dissipate energy in that location in a future accident, increasing the brain injury that will occur. Its not 100% but its a chance. Its also generally a sign that it may have had its share of dings elsewhere and may just be old and past its useful lifespan.
B. ) Even if the internal styro isn't compressed at all, a small crack in the shell could reduce its energy dissipation capacity in that location. It takes a certain amount of energy to crack & tear the outer shell. Have a friend hold a piece of paper and try to punch through it or push through it. When you do this, the paper resists your fist as it tears. If you were to do a formal experiment measuring the resistive force of the paper, you'd find it's higher before the first tear occurs, and, after a tear forms, the paper's resistance to your force decreases significantly. The shell of the helmet has this same effect, translating impact energy to tearing energy or general plastic deformation. If it is already torn, this area will tear easier and hence provide less energy dissipation in a crash, increasing risk of brain injury. I have no idea how much of an impact is taken by the shell vs the polystyrene, it could be 10% of the energy dissipation, could be 20%. But you're talking about your head here.
(source: BS Mech Eng and Matls Sci, though, I never practiced and went straight into software so take it for what its worth)