It’s the initial capacity, i.e. the number of items that ArrayList will allocate to begin with as the internal storage of items.

ArrayList can contain “any number of items” (as long you have the memory for it) and when doing large initial insertions you can tell ArrayList to allocate a larger storage to begin with as to not waste CPU cycles when it tries to allocate more space for the next item.

Example:

ArrayList<Integer> list = new ArrayList<>(2);
list.add(10); // size() == 1
list.add(20); // size() == 2, list is "filled"
list.add(30); // size() == 3, list is expanded to make room for the third element