This is a WebWorker function which the Playground uses to wrap the TypeScript Language Service. You can learn about how this works in this PR to monaco-typescript: microsoft/monaco-typescript#65
The worker is a factory function which returns a subclass for the TSServer to monaco language bindings, this subclass takes into account the // @filename: abc.ts syntax which is used all over the place in TypeScript code.
The code is well commented, so better to just go read that to learn more: index.ts.