The N900 has a simple red privacy LED which is controlled by same chip as the flashlight. In Neo900 we will replace that by a RGB-LED (called "PRIVACY" which you already spotted) which cannot get controlled by that chip and thus is connected to one of our LED controller chips. The purpose is to have an additional info channel to user when s/he does some activity in battery compartment, like swapping uSD or battery. In this case a RGB LED comes in convenient for signalling e.g. umount of any swap completed so it's safe to remove uSD - in case you decided to have your swap on uSD rather than eMMC. Or - for battery swap - user might want to know if either suspend-to-disk or charging the "huge buffer capacitor" already finished so it's safe to proceed with battery swap. If there are still questions regarding this detail, please don't hesitate to ask. cheers jOERG