The Famicom's Controller II does not have start and select buttons, instead it has a microphone. The microphone has a volume slider which will turn the microphone off is slid all the way to the left. Internally, the microphone is a small condenser microphone. The microphone is mixed with the Famicom's audio output so you can hear anything that it picks up in the TV's speaker.
In addition, the microphone can be used as an input to the CPU. The Controllers communicate serially by sending a stream of data bits on one data line to particular memory locations in the 2A03's memory map. Each bit represents a button press or a D-pad direction. Even though Controller II communicates with the Famicom via D0 of $4017, the microphone communicates via D2 of $4016. Controller I communicates by D0 of $4016.
On a Vs System, the service button uses the same input as the microphone. Pressing the service button in must Vs System games acts as an insert coin signal to the game. So by blowing into the microphone you can insert a coin when running VS games in a Famicom, such as with a PowerPak or Everdrive. While this does not work on every game, it is pretty neat to see the credit number increase rapidly as you blow into the microphone. Of course, the games will look very strange because the palette entries are scrambled compared to a regular console PPU. Some are unplayable for other reasons, but the feature is still amusing for a bit.
Here are the games I have personally confirmed work with a real Famicom and its attached microphone :
Zelda no Densetsu - The Hyrule Fantasy
This is the original version of The Legend of Zelda, released on the Famicom Disk System on February 21, 1986. The Microphone can be used to kill Pols Voice, the enemy that looks like a rabbit and is first encountered in Dungeon 5. I find blowing into the microphone to be the most effective method. The NES did not have a microphone, so instead they made Pols Voices weak to arrows. Unfortunately, they forgot to change the hint in the manual. One arrow kills a Pols Voice in the NES version, but arrows do nothing to these enemies in the Famicom Disk System version.
Hikari Shinwa - Palutena no Kagami
This is the original version of Kid Icarus, released on the Famicom Disk System on December 19, 1986. The microphone is used to try to persuade the shopkeeper to lower his prices. The function works by blowing into the microphone while pressing the A button on Controller II. Whenever I try this function at the first shopkeeper's shop in Stage 1-2, he always raises his prices.
I believe shouting something also work, but blowing hard is a lot nicer when other people are around and is definitely more effective for this game. The game appears to be looking for a rapid series of 1s and 0s. Blowing into the microphone is the human equivalent of a noise generator. Emulators that support the microphone often lack the ability to simulate a rapid expansion and contraction of the microphone. In the NES version, A and B on Controller 2 perform the same function.
Zelda no Densetsu 1 - The Hyrule Fantasy
This is the official Famicom cartridge port of the Zelda no Densetsu - The Hyrule Fantasy, released on February 19, 1994 at the very end of the Famicom's life. It and Wario's Woods are the last Famicom cartridges Nintendo released. It takes the NES cartridge port and reinserts the Japanese text (except for the introductory story). It microphone functions identically to the Famicom Disk System version. Unfortunately, despite the Famicom AV's release, they did not make Pols Voice weak to arrows in this version.
Raid on Bungeling Bay
In the 2-player mode of this game, the first player controls the helicopter and the second player can control the enemy forces. The second play can rotate and fire the enemy canons with his controller. If he blows into the microphone, the screen will show a microphone icon. Keep blowing into it and it will turn red. This will cause jets to attack the first player, although when they appear seems a bit random. The microphone function works on both the Famicom and NES version of the game.
Other Games and Microphone Support
Other NES games it may work in include Kid Niki: Radical Ninja and Star Soldier, but the areas where they were tend to be far into the game. Several Japanese-exclusive Famicom games use it but due to the language barrier most of these uses are unconfirmed. Considering that 1,050 or so official licensed cartridges and 200 or so licensed disk system games exist, the true number may never be known.
One well-known game is Takeshi no Chosenjou, (Takeshi's Challenge). This game was designed in part by Japanese comedian and later auteur filmmaker "Beat" Takeshi Kitano. The game requires you to do all sorts of odd and often extremely repetitious tasks. Some commentators have suggested that Kitano was trying to use Andy Kauffman-style humor by frustrating players with such goofy goals as hitting a button 1,000 times or leaving the controller alone for an hour. There is a karaoke mini-game that requires you to use the microphone to "sing" (make noise) in time with the music. There is also a lot of physical violence, another Kitano trademark, for a story of a salaryman trying to escape the humdrum of everyday life.
Here is a list of games which have been known to support the Microphone and a link to a description of their microphone usage, where known :
Apple Town Monogatari - Little Computer People (disk)
Atlantis no Nazo (a.k.a. Super Pitfall 2 prototype)
Bakushou!! Jinsei Gekijou
Bakushou!! Jinsei Gekijou 2
Doraemon
Family BASIC v3 (Built-in Game 0 - Heart)
Hikari Shinwa - Palthena no Kagami (disk)
Kaiketsu Yancha Maru (a.k.a. Kid Niki: Radical Ninja)
Kamen Rider Club
Hikari Shinwa - Palthena no Kagami (disk)
Kaiketsu Yancha Maru (a.k.a. Kid Niki: Radical Ninja)
Kamen Rider Club
Kieta Princess
Raid on Bungeling Bay
Star Luster
Star Soldier
Super Chinese 2 - Dragon Kid (a.k.a. Little Ninja Brothers)
Takeshi no Chousenjou
Zelda no Densetsu - The Hyrule Fantasy (cart and disk)
I have read on Wikipedia and elsewhere that Takeshi no Chosenjou removed the karaoke mini-game in later versions and other games would allow you to use the Select button in place of the microphone. I believe these statements are wholly unfounded. Takeshi no Chosenjou was released on December 10, 1986 and as far as I have seen, there is only one version of the game. Moreover, every official iteration of Nintendo's hardaware, the Famicom, the Sharp C1 Famicom Television, the Sharp Twin Famicom and the Sharp Famicom Titler had the microphone on their Controller II until the Famicom AV was released on December 1, 1993. I sincerely doubt that game makers were anticipating that Nintendo would be ditching the microphone when every version of the hardware included it. Note that the microphone is read at the same memory location as the data from Controller I, so any claim that you should press select on Controller II (which does not have Start and Select buttons), is very dubious.
Raid on Bungeling Bay
Star Luster
Star Soldier
Super Chinese 2 - Dragon Kid (a.k.a. Little Ninja Brothers)
Takeshi no Chousenjou
Zelda no Densetsu - The Hyrule Fantasy (cart and disk)
I have read on Wikipedia and elsewhere that Takeshi no Chosenjou removed the karaoke mini-game in later versions and other games would allow you to use the Select button in place of the microphone. I believe these statements are wholly unfounded. Takeshi no Chosenjou was released on December 10, 1986 and as far as I have seen, there is only one version of the game. Moreover, every official iteration of Nintendo's hardaware, the Famicom, the Sharp C1 Famicom Television, the Sharp Twin Famicom and the Sharp Famicom Titler had the microphone on their Controller II until the Famicom AV was released on December 1, 1993. I sincerely doubt that game makers were anticipating that Nintendo would be ditching the microphone when every version of the hardware included it. Note that the microphone is read at the same memory location as the data from Controller I, so any claim that you should press select on Controller II (which does not have Start and Select buttons), is very dubious.