# let's assume some values for the sake of discussion
$a = 'foo'; $b = 'bar';

$a = $a ^ $b;
# $a now contains both variables, $a and $b logical or'ed
# together, so at this point a=foo^bar and b=bar

$b = $a ^ $b;
# logically or-ing them again (since b still contains bar)
# returns the original value of a, so now a=foo^bar
# and b=foo

$a = $a ^ $b;
# then we logical-or the combined value with b, which now
# contains our original a value. this returns the
# original b value, so now a=bar and b=foo