@user = User.new(params[:user])

Please see my comment on your other post that you work through the
Rails Guides. Then all will become clear (well less muddy anyway).


When creating a new user the data (name, email, password, etc) will be
sent inside a hash. The "params[:user]" it's letting it know that it
needs to create a new user from the parameters that come from the
"user" hash.