It looks like it checks the "line" parameter of the debug hook (it
will be the second function from the top),
The hook function is the first function from the top.
The second function from the top is the "func" (the function
passed as an argument for is_C_function).
It could be verified by inserting the following statement inside the hook
print("Stack level 2 is 'func':", debug.getinfo(2).func == func)
So, the code actually checks the parameters/registers of the "func" stack frame.