What is this doing exactly?
this.$blah = jQuery("<div id=blahblah1></div>");
What is this doing exactly?
this.$blah = jQuery("<div id=blahblah1></div>");
It's creating a new DOM element (div) wrapped in a jQuery object with the id blahblah1 and assigning it to a property of the current object. See the jQuery Core documentation for creating elements from HTML.
This creates a new jQuery object which contains a newly created div with id blahblah1.
The jQuery object is then assigned to the $blah property of the current object.