VC stands for Variable Cancel.
It serves a few purposes
Certain moves, by doing G22 can cancel the move's recovery. Examples of this are Mitsu's 88B, Setsuka's B throw, Zas's command throw, Lizardman stuff, and any characters Back turned throw. Therefore, the opponent will still be in hitstun (or blockstun with Mitsu's move) and you recover way faster than youre supposed to, getting free hits. Here's a vid:
http://youtube.com/watch?v=53fhTbb6OaQ
What he's doing is he soul charges and cancels into a taunt, that puts him back turned, allowing him to do the throw, then cancel it, leaving the opponent as if theyre being thrown, but without Yoshi doing it. Super Glitchy, and it even LOOKS glitchy. Not every character can get BT so easily, but any character can do it from throwing from BT.
-Post GI - If you get GIed, if you G22 right after that, you recover out of the "omg im stunned from being GIed" animation. Obviously, you SHOULD get hit, but you can block or even hit them before they can hit you if you're fast enough.
-Post throw break - Same thing, if you throw someone and you buffer in G22, if they break it, you can recover out of it quicker than you should be able to. Its really apparant with things like Sophie's B+G grab, if the followup is broken, then you can G22 and if the opponent doesnt do the same, you literally have enough time to run up and launch them before they can recover.
So when you screw over things like GI's, throw breaks, throws, etc, it's really dumb and kinda dums down how to actually play the game.
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