Privacy Mode is a new feature unique to Wyze Cam Pan v3 and Wyze Cam Pan v4 that both obstructs the camera's view and disables sound recording.
Because the camera lens can move separately from the base, the camera lens points directly downwards towards the camera base and turns around. When in this mode, the camera turns off, cannot "see" or "hear" anything and does not record.
It's a handy way to disable these features without unplugging your camera from power.