Understanding "caret" functions in C?

I asked other programmers, and they said that caret ^ means xor. But it seems there is an obscure use of caret that I don't fully understand. It seems that ^ suffixing a type modifies it in some way, like how suffixing a type with * declares it a pointer type. The code below works, but can someone explain why and what is going on, and how the caret symbol allows me to declare anonymous function literals inline? I didn't know that you could do that, but I want to fully understand this mysterious functionality.

void(^Function)(void);
int main(int argc, char *argv[]) {
    Function = ^{
        int x = 10;
        printf("%d\n", x);
    };
    Function();
    Function = ^{
        putchar(65);
    };
    Function();
    return 0;
}

Also, is this some compiler extension or is this pure C?

This is an Apple extension to C called Blocks, for Grand Central Dispatch.