The cap is there to smooth-out the voltage that the ESC is getting from the battery. When a battery is under load, the voltage it supplies will "ripple", and this can cause the driver FETs in an ESC to run hotter than they usually would. An electrolytic cap, like the one that's on your Xcelorin, basically helps to smooth-out the voltage going into the ESC and lets it run cooler. Think of it as the way plaster works on a wall that isn't quite smooth.
You could remove it and the ESC would still run, but quite a bit hotter...and it'll shorten the life of the ESC's FETs. I wouldn't recommend removing it, as it's there for a reason.
