set(gca,'###','reverse')
needs 'XDir' or 'YDir' (or 'ZDir', but not for an image) as the second argument if you want to flip the axis.
To flip the image itself you would do what the code does (well, I haven't checked if it is correct, but applying the flip to the data itself rather than the graphics).
I never like to spend too long looking at code that people post from some unknown source asking why it does what it does though because there is no guarantee that random code is in any way sensible so trying to explain its logic is sometimes just a pointless task! If you are following an example from Matlab help or some other obviously reputable source it is useful to include that to at least give us an idea the code is not just bad code from someone who doesn't know what they are doing.
