The hidden option is a new addition to the Apple ecosystem, which launched with last year’s release of iOS 15, iPadOS 15, and macOS 12. It’s one part of two new mic settings that help control the sounds that make it to the other end of your video and audio calls. Although Apple highlighted these features during its software announcements in 2021, the options are tucked away, and only appear in the first place when you’re engaged in a call, so they can be difficult to find.
You can find the options in Control Center. If you’ve done things right, you should see a “Mic Mode” option in the top right, but only when you’ve actually started a phone call, Zoom, FaceTime, etc type interaction. You’d think you can set a default, like can be done with screen recording.