If you look at wired Xbox360 controller it has what looks like 2 filters on its wire near USB connector. I only recently noticed that that bigger filter is actually an alternate connector with strange pin configuration. What is it for?
I believe you're talking about the inline release seen here
You can read about it at this page on xbox.com. It's a safety mechanism that allows that part to release rather than having the controller pull your console off a table or something if someone were to trip on the cord, etc.