function(arg1 arg2)

Which language?

assuming C/C++, it means exactly what you'd expect. First, bitwise OR arg1 and arg2 together, then call the function with the result.

(arg1 | arg2) is an expression in C or C++. It gets evaluated first and its result is passed to the function. So in this case the function has one parameter.

Both arg1 and arg2 are probably int's. This is all part of the world of bitflags/bitfields. Each bit specifies a boolean value for some option, which saves space when you have a bunch of options to toggle on/off.

Here is an example

IMG_SCALE_POW2   00000000000000000000000000000001IMG_FILTER_NONE  00000000000000000000000000000010

The bit on the far left specifies if you want to scale the image. The next bit over specifies no filtering to be used. Now you want both of these options and the function takes a single integer whose bits are the options.

IMG_SCALE_POW2 | IMG_FILTER_NONE00000000000000000000000000000011

The bitwise OR operator combines the two options in the appropriate manner so the integer we pass to the function has both options set.