The 470pF ceramic disc capacitor does two things in this circuit. It filters out the rectified radiofrequency energy after the diode, i.e. smooths out the very rapid bumps to make an audio signal that can be heard. It also forms a fortunate, broad, audio frequency resonance with the leakage inductance of the LT44 transformer when used with the standard piezo earphone supplied. This increases the efficiency of the combination of capacitor, transformer, and earphone. It makes it louder.
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