Is the $1 var pointing to the value of the hash?

$1 captures the words in the string one at a time. This $hash{ $1 } looks that word up in the hash and returns the associates value (id). The ge causes the ids to be substituted for every word in the line.

Perhaps this will clarify things? 

%hash = ( brown=>1, fox=>2, quick=>3, the=>4 );;

$line = 'the quick brown fox';;

$line =~ s[\b([a-z]+)\b][ $hash{ $1 } ]ge;;

print $line;;
4 3 1 2

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In reply to Re^3: using hashes by BrowserUk
in thread iterating hash keys? by R56

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