It expands to the command-line parameters passed to the script. However, it's wrong; it should be in double quotes, like
"$@"
Code:
vnix$ cat >script
echo args: "$@"
for f in "$@"; do echo "arg: $f"; done
^D
vnix$ sh ./script foo bar baz
args: foo bar baz
arg: foo
arg: bar
arg: baz