Things that look like (a . b) are pairs of things a and b. Enclosing them in brackets, ((a . b)) means making a list, with one element, which is that pair (you need a quote or a backquote before it). (list (cons a b)) is the verbose equivalent. In this case, I think, ".*" is a regular expression matching file names, and temporary-file-directory is the directory for file names that match the regular expression.

This is actually quite nice to customize because you can change little bits of behaviour by just adding another pair (regex . string) to the list. Typing "C-h v backup-directory-alist" also explains what the list is for and lets you customize it with a gui.