Its a proximity sensor for tracking hands, gesture and fingers. Like more modern VR controllers on the Oculus Rift and Vive.
Open your hand up and it shows in-game. point your finger, grab something etc etc.
Wouldn't you need a hand strap in order to open your hand without dropping the controller like you can do with the Valve Index controllers? Without one I suppose you can do gestures to a certain degree.
Intel Core i7 8700K | 32 GB DDR 4 PC 3200 | ROG STRIX Z370-F Gaming | RTX 3090 FE| Crappy Monitor| HTC Vive Pro :3