MATLAB: What exactly does the imread() function read

Image Processing Toolboximagesimread

Does the imread() function read the value of each pixel of the specified image? Or something else?

It gets the value of all the pixels and puts them into a 2-D monochrome array or a 3-D color array.

You need to scale it to 0-255 first (which is what [] does), and then cast to uint8:

image8 = uint8(rescale(im, 0, 255));
imwrite(filename, image8);

I have never seen an ip webcam use pic1.jpg as the name of the file to access to trigger a snapshot.

In any case you need to use ipcam() along with the appropriate support package.