Capacitor is usually a 10uF electrolytic, and the purpose is to prevent the programmer UNO from resetting during the programming process. The USB to serial converter on the UNO can generate a reset when the serial connection between the computer and the UNO is established by the various arvdude commands - this is a normal process designed to reset the UNO and run the bootloader when uploading a sketch, but is not desirable when using the UNO as an ISP programmer.