Talc is a naturally-mined, fairly common ingredient in cosmetics. It is used in foundation, loose powder, lipstick, blush, shadow, and even eyeliner. Talc makes a good flowing agent and texturizer. It makes powders, whether loose or pressed, have the desired consistency and quality (silky texture and the ability to easily apply and spread). It is also a great binding agent for pigments, which make them desirable in color formulas.
It is a fairly common belief that talc may contain asbestos, which is not only an irritant, but a demonstrated carcinogen. Talc-containing cosmetics should not generate any adverse skin unless they contain some contaminants that can cause irritations.