I unlocked the Yo-Kai Cam in the menu. I tried using it, it said to align faces on the screen to capture Yo-Kai inspiriting people.
I couldn't get it to work. How do I use it? Does it have in game effects?
Yes!
You can obtain rewards from the Post Office by taking a certain number of photos. After taking my first photo, I was instructed to visit the Post Office to claim my reward, and got a Bronze Doll. I have recently taken enough photos to hit milestones for 5 and 10 unique Yo-Kai, and each time was instructed to claim a new reward.
There is also a daily challenge. When you go into Yo-Kai Cam you will see a message at the bottom of the screen telling you which type of Yo-Kai you need to photograph to get the daily prize. This prize is also picked up at the Uptown Post Office.
Lining up the circle can be a bit tricky. One thing I've found that works is getting the alignment where I would think it would be successful and moving closer, while keeping the circle's top align with the forehead. Eventually I would see "OK!" and quickly snap the photo before it changed its mind.