What is this grey button on the New Nintendo 3DS XL?

There is a grey button-like thing on the right side of the New Nintendo 3ds XL. It is above the main ABXY buttons:

Specifically, it's on the bottom half of the system, next to the screen, straight above the Y and diagonal to the X button. I used to have a normal 3DS, but I don't think this ever existed on it.

It looks like a button, but I'm not sure. What is it and what does it do?

As per the Nintendo site there is this image that explains the button. They call it the 'C stick'.

New controls

The C stick brings new control possibilities (like intuitive camera control) to compatible games.