React Hook recipe from https://usehooks.com

use-hover-alt-example.js

import { useState, useCallback, useRef } from "react";

// Usage
function App() {
  const [hoverRef, isHovered] = useHover();

  return (
    <div ref={hoverRef}>
      {isHovered ? '😁' : '☹️'}
    </div>
  );
}

// Hook
function useHover() {
  const [value, setValue] = useState(false);
	
  // Wrap in useCallback so we can use in dependencies below
  const handleMouseOver = useCallback(() => setValue(true), []);
  const handleMouseOut = useCallback(() => setValue(false), []);

  // Keep track of the last node passed to callbackRef
  // so we can remove its event listeners.
  const ref = useRef();
  
  // Use a callback ref instead of useEffect so that event listeners
  // get changed in the case that the returned ref gets added to
  // a different element later. With useEffect, changes to ref.current
  // wouldn't cause a rerender and thus the effect would run again.
  const callbackRef = useCallback(
    node => {
      if (ref.current) {
        ref.current.removeEventListener("mouseover", handleMouseOver);
        ref.current.removeEventListener("mouseout", handleMouseOut);
      }

      ref.current = node;

      if (ref.current) {
        ref.current.addEventListener("mouseover", handleMouseOver);
        ref.current.addEventListener("mouseout", handleMouseOut);
      }
    },
    [handleMouseOver, handleMouseOut]
  );

  return [callbackRef, value];
}

@KymaniHanson, basically they are assigning the node element to the ref value.
Where node element is your component which is using the hook ref. (line 8)

For more details check the official docs
https://reactjs.org/docs/hooks-faq.html#how-can-i-measure-a-dom-node