Explanation:
 
~v1 is the distance that the enemy is in front of Torque. ~v2 is the distance that the enemyis to the side of Torque. If both of these are between -1 and +1, then the enemy must be on Torque's perimeter, so he jumps to his discharge-energy routine.

One part of this line appears to make no sense at first glance. This is:

The reason behind these two statements is as follows: When cloaking was being introduced, it was at first suggested that a cloaked enemy's variables (#enemy_x and #enemy_y) would be zero. This explains the first part. If the enemy is cloaked then no matter where it is, its x- and y-coordinates would be between -1 and +1, so Torque would think that the enemy was on his perimeter. Torque doesn't want to discharge energy needlessly, so this check was to prevent this from happening.

In fact, the idea of having a cloaked cybug's status variables set to zero never actually happened. When an enemy cybug is cloaked, you just see the next-closest enemy as if it were actually the closest enemy.

The second part is just a pointless always-true expression, so that Shea could use a find-and-replace tool to add any necessary extra checks, once the cloaking situation had been finalised. If no extra checks were needed, then this expression would make no difference to Torque's operation.