How bad is this frame damage

I wouldn’t call that significant. There was probably a hole drilled there from the factory with a cable housing stop bonded into place. It doesn’t look like carbon fiber damage. I’d ride it and just keep an eye on that hole to make sure it doesn’t start cracking. If it is the cable housing termination point though that presents a problem. If your front derailleur cannot function as it is then if it were me i’d try to use some J-B Weld epoxy (the 24 hour cure stuff) to repair it. It won’t look pretty but a big enough blob of epoxy should hold it. It would help if you could gently sand the paint off in that location to expose the carbon fiber so the epoxy has something it can bond to besides paint.

It looks like that was the cable stop so unfortunately your front derailleur will no longer work. If you are the original owner I would try for a warranty claim, if not, given the age of the frame a repair probably isn’t worth the expense.