It's basically just formatting the string in uppercase hexadecimal format - see the docs.
The hexadecimal ("X") format specifier converts a number to a string of hexadecimal digits. The case of the format specifier indicates whether to use uppercase or lowercase characters for hexadecimal digits that are greater than 9.
This particular format is known as Composite Formatting, so to break it down:
{0 = parameterIndex, 2 = alignment :X2 = formatString}