blur simply removes focus from the control. Think of it in terms of eyesight – focus is focusing attention onto something and blur is removing that focus. But I’ll admit that it’s a funky idiom in terms of keyboard navigation. 
So in the case of the above snippet, it’s essentially rejecting the focus request by blurring immediately. If you add a focus ring with *:focus { outline: 2px solid blue; }, you’ll see the focus being given for a split second (the focus ring appears) and then immediately revoked (the focus ring goes away).