This is NGC 7129 - a reflection nebula located some 3,330 light-years distant (in the constellation of Cepheus). Reflection nebulae are created when light from stars embedded in a molecular cloud come in contact with dense grains of dust - causing the brilliantly hot light to scatter about - thus generating a reflection.
This particular nebula is home to a cluster of more than 130 young stars. Each are believed to be less than 1 million years in age (a time in which stars are barely out of the protostar phase of stellar evolution). Most can be seen primarily in the center of the nebula, where the bubble-like apparition is most notable. (And if you look closely, the bubble appears similar to a blooming flower - it even has corresponding leafs and a vague stem)
Said stars are responsible for the ionization of the hydrogen gas clouds, which contribute to the blue hue of the region. The reddish areas are home to several more nebula clouds, which are in the process of collapsing to form a new generation of stars.