It's a small sensor on the mainboard that detects whether the console is in its horizontal or vertical position. The sensor is used to display the ring of light in the correct orientation. For example, if you have your console flat on your desk, your top left (I think) light will glow. Without the sensor, if you turn your console into its vertical position, the same light will still be glowing. With the sensor it changes so that the top left light is always glowing, whichever way the console is sat.