The CHECKSUM of the value returned by NEWID is a signed integer (maybe a big integer, don't recall), so the ABS insures that the number is positive.  Then the MODULO of this value is taken, in this case using 26 which will return a value between 0 and 25 (inclusive).  This value is then added to 97 which results in a value between 97 and 122.  This value is then used to return the ASCII character related to that number which results a letter between 'a' and 'z' (always a lower case value).