The reference for asm shaders is here. You should read through the relevant sections on vs_2_x for information on registers and instructions.
From a quick glance at that code, it appears to be doing basic vertex skinning. The vertex has 3 indices in v2 that indicate which matrices to use from an array of matrices loaded into shader constants, and 3 weights in v1 that are multiplied with the contribution from each matrix. The shader also rotates normals into world space, transforms the position into projection space, and does a few other standard vertex shader operations.