the > defines a standard output stream (stdout) redirection to the file 'output'. the 2> defines a standard error stream (stderr) redirection to, in this case, the same as is defined for stream 1, defined by the &1, which is stdout. 1 is assumed as it's default. you could write 1> instead of > for more clarity.
so this makes ALL stream output go to the file 'output' rather than just the stdout that a normal > gives.
some more info at