C2C is a C cross compiler for the PIC processor. It is called a cross compiler, not because it is unhappy (ho ho) but because it does not produce output for the machine it actually runs on. You run the compiler on your PC, but it produces code for the PIC.
C2C acts on a text file containing the C program itself (the source file) and produces an assembler file for MPLAB to assemble. You can look at the assembler file if you wish, and C2C will embed the C you have written as comments in the assembler source.
C2C also provides the editing environment and will manage projects made up of a number of different files of C program source.