• The arguments starting with + are commands in vi that will be executed
• set ff=unix is a shortcut for set fileformat=unix and means to use "unix" file format, i.e. without the carriage return \r character.
• %s/^M$// is a pattern substitution for all lines in the entire buffer, the pattern is "carriage return at end of the line", where ^M is not two literal characters but actually one, to enter it on the command line press Ctrl followed by Enter/Return
• bufdo means to run command in all buffers (each file is opened in a separate buffer)
• q is to quit vi

Note: the set ff=unix is necessary, otherwise the pattern substitution will not do anything if all the lines end with \r = the file is in dos format, because in that case the line ending character will not be considered as part of the line.

Note: if a shell-script has "accidentally" some carriage returns in it, then when you try to execute you may get an error: bad interpreter: No such file or directory. This one-liner fixes that problem. If you know that all the lines in the file have the carriage return, and there is only one file to fix, then a simplified version of the one-liner is enough:

vi +'set ff=unix' +wq file1