locale mon prints the names of months in the current locale, for example:

January;February;March;April;May;June;July;August;September;October;November;December

mkdir creates directories specified as command line arguments.

$(...) performs Command Substitution, which means that the output of the command ... replaces the $(...) expression. For example mkdir $(echo a b) would become mkdir a b and would create directories a and b.

To create directories for each month, we cannot simply use mkdir $(locale mon), because the output of locale mon is not January February ... but January;February;.... With IFS=';' we tell the shell to use ; as the field separator instead of the default.

We wrapped the entire command inside (...), which makes it a sub-shell. This means that changes to variables inside (...) will not be visible outside the sub-shell. We did this because we only want to override the value of IFS for this single operation, we want to keep the default value in the current shell.