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My guess from the working of it is that it suppresses the output of the command

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up vote 2 down vote accepted

It suppresses the command entirely.

You use it commonly in batch files to either add a comment to your code (explaining to the reader what is going on) or stop a line from running - for example:

# Tell the user the results 
cat $HOME/.temp/results.txt

# This next line doesn't work
# cat $HOME/.temp/next.txt

The equivalent in DOS is to prefix the line with REM.

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On the command line it's just a comment. Nothing happens.

#mkdir temp  -> yields nothing.

In a script:

#!/bin/bash

or

#!/bin/perl

has a special meaning to indicate the interpreter.

Otherwise it's used to comment out the line.

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For the sake of completeness, a Wikipedia article on shebang (the #! sequence). – gronostaj Oct 17 '13 at 7:12
    
I think you mean "interpreter", not "interrupter" :) – FreudianSlip Oct 17 '13 at 7:48

It makes bash (assuming that's what you are using) and most other shells view that line as a comment, therefore, "running it" does nothing.

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