What does the “it” function do in this code?

See the Jasmine testing framework.

The it(...) function defines a test case (aka a “spec”).

describe("A suite", function() {
  it("contains spec with an expectation", function() {
    expect(true).toBe(true);
  });
});

Note that AngularJS E2E Testing…

… uses Jasmine for its test syntax.