It is a low powered theodolite used for many things including plotting the "fall of shot" from emplaced gun batteries, or laying out major works, airfields etc.
It would certainly be worth something. It the theodolite itself is in as good a condition as it looks, quite big money to the right person. What ever you do, do NOT sell it without getting someone to value it, whether they are a military expert or a collector of optical devices, my advice would be to go with the second option. Get at least three valuations. Get an older Japanese person to read all of the writing, as it will be somewhat cryptic e.g. "precision device optical viewing" or similar, get the makers name and try to contact them.
This is a delicate precision device do not handle it roughly or let inexperienced persons "play" with it. Do not lose any of the attachments if you have them, I think I see the handle of the lens cleaning brush, there may be such things as lens caps and sun shields and a small screwdriver and several small bars for adjusting the levels, they are very important if they were originally fitted and will increase the value considerably if it is complete.
Personally I would keep it, not only as a keepsake, but as a nicely made optical device.