It is what's called a CTE - Computed Table Expression ... Additionally it is a recursive CTE. They are quite powerful. I use them to walk heirarchies and XML sometimes.

You'll notice the "from T" inside of it ... that makes it recursive... the first part of the union marks the "anchor" the second part is the recursive part, it selects from the T table (which initially has 1 record, the anchor) and then adds to it, and around and around it goes until the end condition is met and the whole thing is returned.

Google "MSDN recursive CTE" ... the MSDN entry on them should be the first link or two returned. It goes into a bit more (better) explanation.

-tg