Inside the recursive function (named : , you could call it whatever you want, but i think : looks more mysterious!), a pipeline is created which forks two more instances of the function (each of which will be a whole process). The & symbol will cause the command to be executed in the background, and the shell will not wait for the command to finish. Then the function exits. However, for every instance of the function which exits in this manner, two more have already been created. The result is a vast number of processes, extremely quickly and will quickly consume a lot of resources!
Note : Think of the last : as the igniter to the fork bomb!
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