It's creating a hash named %foo using a hash slice built out of the elements in @foo. Then it's assigning to that slice the values 0 to (the number of elements). So if @foo = ('a', 'b', 'c'), you get

@foo{'a', 'b', 'c'} = (0, 1, 2);
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which is itself just shorthand for

$foo{'a'} = 0;
$foo{'b'} = 1;
$foo{'c'} = 2;
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(technically, @foo in scalar context returns a value one too large, so we're really mapping to (0,1,2,3), but the odd element gets ignored. It might be more proper to use $#foo there (the index of the last element, instead of the number of elements))