The FBI is asking that Apple provide them the ability to bypass the PIN timeout limits.
In modern iphones, those limits are handled by the secure enclave. However on the 5C in question, the limits are done in iOS and can be disabled by flashing a custom version of iOS. That's what the FBI is requesting.
I'm not sure what method Snowden has in mind for decrypting this device without going through Apple. It seems like it must be a 0day.