It appears that in this case, as the original battery aged, its internal apparent resistance (ESR) increased beyond the original design expectations, to a point where the phone won't work when plugged in to a charging cable because despite the charging cable most likely being able to deliver sufficient power at DC, it had too much impedance to supply it quickly enough. When current is demanded from a source that has too high impedance to supply it, the voltage drops. This will result in significant voltage ripple to the power supply of the digital circuits, which can cause logic to not function correctly.
Adding a large capacitor basically replaced the filtering and stabilization role of the original battery.
Interestingly people often intentionally remove capacitors for side channel measurements and glitching attacks.