while read the line we want to get that matches ("key value") from file2 and split it to the parts with '=' and assign to and array that named "a"
[ our line was --> <key value="customer/priority"/> )
so

Code:

a[1] -->"    <key value"
a[2] -->""customer/priority"/>"

and works same procedure on the for other matches lines...
and we collect the all a[2] to one array that named "s"

Code:

s[0]-->"customer/priority"/>"
s[1]-->"customer/priority2"/>"
s[2]-->"customer/priority4"/>"

and reading the file2 must finish
and if the NR is equal the FNR so it is read first file,,
else awk start to read other files (second,third,...)
so NR!=FNR is simply means the awk start to reading process from second and other files..
in our issue,we read the second file so it is "file1" remember file arguments

Code:

awk ... file2 file1

Code:

xx="\"ref/img/" -->  it s just an assing a value.. xx=""ref/img/" (we will add the starting of the new URL value )

Code:

sub("URL=.*","URL="xx s[i++],$0)

--> change the URL=.* -->

Code:

URL="ref/img/customer/priority"/>
with
URL="xx + s[0]    " ,from our line ($0)
xx->""ref/img/"
s[0]->"customer/priority"/>"
so new URL express --> "URL="ref/img/customer/priority"/>"

we change the URL portion from our line and
print-> print the new line (with new URL)

so every read line (records) means the `i` will increase by one [i++]
finally , works same procedure for the other lines from file1 with s[1] and s[2] values

regards
ygemici