Explain: jQuery Caching Code

Explain: jQuery Caching Code

This snippet of code will return an element from a cache if it has been
selected previously or select, cache, and return the element. It is useful
for updating contents of elements which are never significantly changed
(i.e, the parent of a counter seen by the user where the number changes
but the parent does not). The code is as follows:
var $$ = (function() {
var cache = {};
return (function (selector) {
return cache[selector] || ( cache[selector] = jQuery (selector) );
});
})();
You can use it like so:
$$('#id')



Now... how the heck does this work? How does $$ have access to jQuery
selector? It has nothing to do with $$ starting with $, you could just as
well do var foo. How does $$ map what is passed into it to selector. I
would expect to see var selector = argumentName inside of $$. Also, to me
it does not appear that $$ is setup to receive arguments (e.g.,
function(input){} ) but it readily does?
This small piece of code is incredibly confusing to me and some clarity
would be greatly appreciated. Thanks!