What does the arrow operator, '->', do in Java?

That's part of the syntax of the new lambda expressions, to be introduced in Java 8. There are a couple of online tutorials to get the hang of it, here's a link to one. Basically, the -> separates the parameters (left-side) from the implementation (right side).

The general syntax for using lambda expressions is

(Parameters) -> { Body } where the -> separates parameters and lambda expression body.

The parameters are enclosed in parentheses which is the same way as for methods and the lambda expression body is a block of code enclosed in braces.

This one is useful as well when you want to implement a functional interface

Runnable r = ()-> System.out.print("Run method");

is equivalent to

Runnable r = new Runnable() {
        @Override
        public void run() {
            System.out.print("Run method");
        }
};