Cursor color

It changes the color of the boxes drawn sequencially around screen objects. This is only useful if you have an accessory attached to your iPad.

That only works when:

1. Switch Control is turned On
2. You have attached an Adaptive Accessory peice of hardware or wish to set screen controls up for particular actions.

It isn't used for simply changing the color of the cursor.

http://help.apple.com/iphone/7/#/iph400b2f114