The table is a mapping between the number of the bowling pin and the index of that pin in the output string: 'I I I I\n I I I \n I I \n I '

For example, pin #7 is the first character in the string, index 0. Pin #8 is at index 2.

For each pin to be removed, I replace that index in the output string with a space.

This version might be a little clearer:

function bowlingPins(arr) {

  // locations is mapping of
  // pin: index
  const locations = {
    // Back row
    7:  0,
    8:  2,
    9:  4,
    10: 6,
    
    4:  9,
    5: 11,
    6: 13,
    
    2: 18,
    3: 20,
    
    1: 27
  }
  
  let pins = 'I I I I\n' +
             ' I I I \n' +
             '  I I  \n' +
             '   I   '
             
  pins = pins.split('')
  
  for (let x of arr)
    pins.splice(locations[x], 1, ' ')
    
  return pins.join('')
}