blkproc is considered obsolete and should not be used.
[1 2] means that the function will start in the top left corner and take a 1 pixel by 2 pixel part of the image, and will pass that to the function and will store the result. Then it will move right by 2 pixels and take 1x2 pixels there, pass that to the function, and it will keep sliding the window over two pixels at a time. When it gets to the end of the first row it will start at the beginning of the second row, take 1x2 there, pass it to the function and so on.
The way it does all of this is by using for loops internally. The code did not separate the image into separate variables and process each variable, and did not create cell arrays of subsets and process each subset: it just used for loops.
