The goal here is to take an input like this:

police_station
post_office
real_estate_agency

... and convert it to an output like this:

Police Station
Post Office
Real Estate Agency

• -e ... the sed command can take several -e parameters, which will be executed one by one when processing each line in the input
• The s/// command is a pattern replacement, and has the general format s/pattern/replacement/flags
• s/^./\U&/ - replace the first letter of the line with uppercase version of the letter: \U means convert to uppercase, & is the matched string
• s/_./\U&/g- replace _ and any letter followed by it. The g flag at the end means a "global" replacement, so all occurrences of the pattern _. will be replaced
• s/_/ /g - replace all underscores with spaces
• Input to sed can come from a list of files, or input redirection with <, or from a pipe.