This creates a function that acts on the movie clip "star_mc" every time the animation enters a new frame on the main time line. If there are 30 frames a second then this function will iterate 30 times a second performing it's operations.

var xMouse = _root._xmouse;
var yMouse = _root._ymouse;

This declares two variables xMouse and yMouse that store the changing x and y coordinates of the cursor during run time.

if(Math.abs(xMouse - this._x) < 1) {
star_mc._x = xMouse;
star_mc._y = yMouse;
}

This conditional action tells the movieclip to move to the location of the cursor if the value of xMouse minus this.x is less than 1. meaning that if the difference between the cursor position and the movieclip position is less than 1 the clip (flash icon) is shunted to its location.

else {
star_mc._x -= (this._x-xMouse) / 4;
star_mc._y -= (this._y-yMouse) / 4;
}

If the preceding condition is not met the operation inside the else brackets is called.

The operation takes the position of the movie clip in a given frame then subtracts a quarter of the difference between the position and the mouse position

This creates the easing effect which decelerates the velocity of the icon as it gets closer to the mouse position.

the divisor 4 simply amplified this effect by reducing this difference that it subtracts from the running total even further.