What is the purpose of MAX232

The 10uF capacitor only short-circuits AC voltages that develop between VCC and GND: noise on the power supply. A capacitor is an open component for direct current!

If you supply this MAX232 with a 5V single voltage supply, its V + and V- pins can create a double supply: a positive voltage greater than 5V and a more or less equal but opposite negative voltage. This is how it works when an oscillator drives a network of diodes and capacitors: Search for the term Charge pump . The capacitors needed for this charge pump to work are connected to pins 1 and 3 and pins 4 and 5.

The 1uF capacitors at outputs 2 and 6 (V + and V-) are just additional "rail caps" on this dual supply that is generated by the chip. You are probably just removing some ripple and noise from this generated supply. (To filter the ripple, these capacitors don't have to be large. Why? Because the internal oscillator for the charge pump is likely to operate at a frequency much higher than 60 Hz.)

The use of the capacitor is switched on. Pin 2 shows a slight deviation from the "typical operating circuit" in the data sheet from Texas Instruments (Figure 4). In the data sheet, the pin is capacitively connected to ground via a 1uF capacitor. Here you have it paired with VCC. This is not important as both VCC and GND are AC ground.

However, this configuration is not a bug. It is shown in the original Maxim data sheets for this device!

An important note in the TI datasheet is that this device is compatible with another company's existing product (and is therefore not a TI in-house design). We need to look at the Maxim datasheet in addition to the TI datasheet. This datasheet has a lot more discussion and numerous additional diagrams.