A capo was a prisoner chosen by the SS officers to be directly in charge of a group of prisoners in the Nazi concentration camps. They were an intermediary between the guards and the other prisoners and were charged with keeping them in line. The guards, for example, weren't living with the prisoners, so the capo would be in charge of day-to-day life in the barracks.
As Frankl describes, the worst and most brutal individuals, sometimes former criminals, were assigned to be capos. They could be more cruel and vicious to the prisoners than the SS guards. Any capo who was not sufficiently sadistic and violent would quickly be replaced.
Frankl also describes the capos as privileged. For example, while the other prisoners were starving, the capos had extra rations, and some were fat. The other prisoners feared and hated their capos. However, some capos were better than others, and it could be lifesaving to end up with a less brutal one.
The capos were part of the system that ensured suffering in the camps. They were symbols of the Nazi vision of hierarchy, in which society was organized in tiers of privilege from top to bottom. Those above one group had total power over those below them. The lower groups, considered weaker, had to submit to those made artificially strong.