What is this wire for?
At one end of the wire is a 3.5 mm Jack plug. On the other end of the wire is presumably a glass LED.
When connected to the phone, nothing happens. The LED does not start to glow.
Also, this wire doesn't work as a microphone. It's also not an earpiece.
What is it for?
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It's part of an IR Blaster setup. That looks like the "blaster", aka the IR LED Transmitter. Most receivers have multiple ones to catch reflections and such