From the description it appears to be either a foundation (like interfacing) piece or the background square. Re-read the description and see if it sounds like that is what you sew your applique to or it just lines each square and keeps everything stable.
No, it's not the batting.
bkay
edit: If you get overwhelmed with it, consider using alternating plain blocks or sashing to make it the size you want.
Last edited by bkay; 02-18-2021 at 07:28 AM.
Reason: added thought