a: A is type ascription; see What is the purpose of type ascriptions in Scala?
: _* is a special instance of type ascription which tells the compiler to treat a single argument of a sequence type as a variable argument sequence, i.e. varargs.
It is completely valid to create a Queue using Queue.apply that has a single element which is a sequence or iterable, so this is exactly what happens when you give a single Iterable[A].