When we left of last time we had the structure of the code that would get jQuery started. We had the constructor function, but it called an init function that wasn't written yet.
On line 99, we see the expression:
jQuery.fn = jQuery.prototype = {
...
};
jQuery.fn.init.prototype = jQuery.fn;
Whenever a new object is created, a object to be it's prototype is selected, and it inherits all of that objects properties. In this line, jQuery.fn is set equal to a reference to jQuery's prototype object.