"number" in hippy's program is a variable which might be defined as a byte (symbol number = b13), or a word (symbol number = w6). That variable will contain the numeric portion of a command you enter. For instance, if all your program is doing is waiting for commands to be serially input (and then executing them), you would call ObeyCommand in an endless loop. For each successive numeral you input, the "if" statement would multiply "number" by 10 (it having been originally initialized to zero), and then add to it the numeric value of the ascii character you typed (which is obtained by subtracting "0" (with the quotes) from the ascii character which is between "0" and "9").
Thus in the instance of the command, 200P, when the parsing code came upon the character, P, the variable, number, would contain the value, 200. The 'Case P:' statement would then be 'Pause 200', giving you a 200 millisecond pause.