Take a look here: http://stat.ethz.ch/R-manual/R-devel/library/base/html/Quotes.html
Backslash is used to start an escape sequence inside character constants. Escaping a character not in the following table is an error.
...
\nnn character with given octal code (1, 2 or 3 digits)
Then take a look at this ASCII table to see how octal codes get represented. As you will see 040 is a space.
And just for fun:
> '\110\145\154\154\157\040\127\157\162\154\144\041'
[1] "Hello World!"