AFAIK the “action button” is going to replace the “mute” switch which is rumoured to be the most common component failure on recent model iPhones. Pocket lint/etc is can be forced into the switch every time you operate it and eventually that leads to failure (normally long after the warranty runs out and when repairing the button would cost more than the device is worth).
Apple is on a long running effort to increase device longevity and that switch is the biggest barrier right now.
The mute switch is also prone to accidental input, and it’s the only exterior button where accidentally triggering it is potentially a problem (you could miss an important call/etc).
On top of all that - it’s a bit silly to have a slider on/off button for a feature that is already triggered in software and/or on a schedule. So the state of the slider button already doesn’t necessarily match the current mute status which is confusing. And with intelligent notifications why do you need a button anyway? You will surely be able to use the “Action” button to toggle the mute switch, but that won’t be the default button assignment. I’d bet it will be a camera button by default.
It’s expected to be a solid state pressure sensitive capacitive button with haptic feedback. Apple uses those in a bunch of other devices (the whole screen was one on older iPhones) and they are cheap, almost indistinguishable from a regular button, more reliable long term, and can only be activated deliberately (they might not work with gloves on…)