Tar is used to handle archives (historically saved on tapes).

• The x tells it to extract files from the archive
• v stands for verbose
• j for bzip2 archive
• f indicates the file name
• finally: C tells it to change directory (so the package content will be unpacked there)

See also man tar.

If you ever need to know what a parameter does again, try to read the man first. The command man tar, and then doing /-C will get you to the section describing what -C stands for, which in this example represents 'change directory' (i.e. sends the results of the unpacking to /mnt/gentoo/usr).

It unpacks /mnt/gentoo/portage-latest.tar.bz2 in /mnt/gentoo/usr/