Here's a quick rundown...
Start from the ()'s that are furthest in. In this case, it's the $remove. $remove will remove whatever you tell it to. You already know what $1- is. $remove is going to remove :: [NEW] :: from $1-. Next, you move outward and you find $replace. $replace will replace text with something else. In this case, we're replace [ with [ + a space. $chr(32) is a space. $+ combines the two items together. If you just put a space there, mIRC would assume you're just spacing things out, so you need to use $chr(32). And if you didn't use $+, then it would put 2 spaces because then it would assume your space between [ and $chr(32) *was* meant as a space. Of course, mIRC would still output it as a single space, but it's better to do it right. Anyhow, you continue on through there and see that ] is then replace with a space + ]. And then color 14 is replaced by color 07.
Check the /help file for syntax if you want to look into those further.
As for why your example didn't work, it's because of the colors. Change $1- to $strip($1-) and then it would work the way you expect.
To add color to the different parts would take more effort because you'd need to find where each part starts. Maybe I'll look into that a little later.
