The Passive Kit includes a high-impedance volume pot and other components that help impedance-match your acoustic pickups to your amp, to prevent loss of high frequencies (muffled sound).
The capacitor is used to prevent the loss of higher frequencies as a pot is turned down, it is sometimes accompanied by a series or parallel resistor, to limit the amount of treble being retained and to match it to the pot's taper. They are not necessary in every install.