It was badly written when it was new (sometime after PHP 5 was released, because it contains what from the name looks like a function designed to emulate one introduced in php4.3). The whole point of source code is to be legible to human beings.
There's nothing in that code that has anything to do with <br> tags. It takes an element of an array (how the data you've shown us is stored in the array is not explained, though I'm going to make a wild guess at it being one line per element), does a lot of stuff to it, and then (depending on the value of a variable the nature of which is not explained) puts it either into a variable $description, or a variable $items[$item]['description'].
On the basis of what you say seems to be happening, and on the basis that you presumably have some reason to suspect that line (because it's the hardest to understand, perhaps?) I'm going to go way out on a cliché here and suspect that you're only getting an empty string (you don't say what you are getting) because you're only looking at what happens to the first line - "<description><![CDATA[" (the line after that reads "<BR>").
If the entire chunk of text you've shown us is stored in a single element of the array, and if it's all passed through that (if my suspicions as to its intention are correct, wildly unreliable) mess the result is
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