I’m working with a company that is has gone through a registration (TS) audit and the auditor asked a question I don’t under stand.

This is how understand it was put; they were doing a review of how new projects are released (basically APQP process) and they asked them if they had generated a list of significant key product characteristics (SKPC’s) for warranty.

Does anyone have any ideas on what they might be looking for?

One of the outputs of the review of the part and the process is designation special /critical characteristics as needed.
The characteristics can be defined at design of the part or assembly (fit/ function, safety etc) or during the design of the production process- production parameters etc.

There is no requirement that there should be characteristics defined but you must decide that you do not need them.
The whole aspect of CC is in fact the severity of their failure and thus the methods of proving conformity.