PANS-ATM chapter 6 should cover what you are asking about.
Your description of the separation in class C airspace is puzzling.VFR flights should be separated from IFR flights but telling no. 2/VFR to follow no. 1/IFR is an example of reduced separation in the vicinity of an aerodrome provided that no.2 has no.1 in sight (as alluded to by topdrop). On the other hand, the aerodrome controller may have had both in sight (another application of reduced separation in the vicinity of the aerodrome) but told no. 2 to follow no. 1 as a means of managing the flow of traffic. Note that there are other conditions required to be met when using reduced separation in the vicinity of an aerodrome that I have not mentioned - mainly for brevity, but also because I'm not sure I remember all the details - which would also have to be satisfied.