"C" is for GameChat.
http://www.nintendoworldreport.com/news/70543/gamechat-linked-to-switch-2-c-button-webcam-announced
The mysterious C-button on the Switch 2 JoyCon launches GameChat, Nintendo announced in today's Direct.
GameChat uses a noise-cancelling mic on top of the system, even when docked. Chat members appear at the bottom of the screen under a slightly shrunken game window. Players do not need to be playing the same game and can stream their screens to each other.
With a Switch 2 Camera, a webcam launching alongside the system, players can stream their face over their gameplay with the background automatically removed. Some games, such as an upgraded Mario Party Jamboree, can replace a player's in-game icon with a live facecam.
An active Nintendo Switch Online account is required, and players with Parental Controls must request permission to join each voice chat. Nintendo Switch Online GameChat will have a free trial until March 31, 2026.