The command

replace   :a0 :a1 ... an-1
     in   expression containing some occurences of :ai
     by   v0 v1 ... vp-1

is rewritten in a prefixed parenthesized form

{{lambda {:a0 :a1 ... an-1}
          expression containing some occurences of :ai}
          v0 v1 ... vp-1}

so called IIFE (Immediately Invoked Function Expression), and defines an anonymous function containing a sequence of n arguments :ai, immediately invoked on a sequence of p values vi, and returning the expression in its body as so modified:

1) if p < n     (partial application)

• the occurrences of the p first arguments are replaced in the function's body by the corresponding p given values,
• a function waiting for missing n-p values is created,
• and its reference is returned.
• example:
{{lambda {:x :y} ... :y ... :x ...} hello}
-> {lambda {:y} ... :y ... hello ...}    // replaces :x by hello
-> LAMB_123                              // the new functions's reference
• called with the value world this function will return ... world ... hello ...

2) if p = n     (normal application)

• the occurences of the n arguments are replaced in the function's body by the corresponding p given values,
• the body is evaluated and the result is returned.
• example
{{lambda {:x :y} ... :y ... :x ...} hello world}
-> {{lambda {:y} ... :y ... hello ...} world}  // replaces :x by hello
-> {{lambda {} ... world ... hello ...} }      // replaces :y by world
->             ... world ... hello ...         // the value

3) if p > n    (variadicity)

• the occurrences of the n-1 first arguments are replaced in the function's body by the corresponding n-1 given values,
• the occurrences of the last argument are replaced in the body by the sequence of p-n supernumerary values,
• the body is evaluated and the result is returned.
• example:
{{lambda {:x :y} ... :y ... :x ...} hello world good morning}
-> {{lambda {:y} ... :y ... hello ...} world good morning}
-> {{lambda {} ... world good morning ... hello ...}}
->             ... world good morning ... hello ...        // the value

More can be seen in http://lambdaway.free.fr/lambdawalks/?view=lambda