Players on the same team can see the cards in each other’s card holders and interact with them. They can also see the cards that their teammates are holding.
Teams are set by the host in the session options. There are 8 possible teams and each player slot can be set to one of them (or no team). So teams are not associated directly to the players in the game, but to slots in the same way as player colors are. This allows you to already set up teams when creating a starting state for a game, without any players present. When a player switches their player slot/color, they will also switch to the team of that slot.