Why There’s A Cutout On The Side Of iPhone

Starting with iPhone 12, Apple added this rounded cutout on the side of every model. But they didn’t explain what it was or why it existed. Many assumed it would be for the Apple Pencil. Since it looked similar to a cutout included on the iPad that allows the second generation Apple Pencil to magnetically attach and charge. But the iPhone doesn’t support Apple Pencil. So why did Apple add this cutout to iPhone?