iPhone 12 camera inserts unknown icon in photo of crossword puzzle

Solution 1:

The icon offers an Optical Character Recognition (OCR) feature to extract the actual text from the image as individual characters you can copy/paste etc. Apple calls this feature "Live Text" and it was introduced with iOS 15 for supported devices.

The icon appears on the phone when you have it directed at something which the feature recognizes as text. Just ignore it and take the picture if you don't want to use it.

If you do want to use it, clicking on the icon in the camera app brings up a familiar "Copy" / "Select All" / "Look Up" clipboard management toolbar. You can interactively swipe some regions of the image to select the text in them for copying or other manipulation.

In the photo album viewer, the icon gets superimposed over images which contain text so that you can extract it "non-live" after the fact. The icon is still not actually part of the picture, as you can easily verify by zooming etc.

(I literally discovered this by directing my phone camera at the picture you posted. I wasn't aware of this feature until now.)

Solution 2:

As the other answer mentioned, the icon is for Live Text. You can't turn it for just one picture (or even just one app) but there is a system-wide setting that disables it completely.

Open the Settings app and tap General, then Language & Region, then find the switch for Live Text and turn it off.

Go back to your photo and the icon should be gone.