When you execute def test ... outside of any explicit class or module definition, you are essentially in the Object class context, so test is now an instance method of Object
In irb ...
1.8.7 :001 > def test
1.8.7 :002?> "Hello world"
1.8.7 :003?> end
=> nil
1.8.7 :004 > Object.instance_methods.sort
=> ["==", "===", "=~", "__id__", "__send__", "class", "clone", "display", "dup", "enum_for", "eql?", "equal?", "extend", "freeze", "frozen?", "hash", "id", "inspect", "instance_eval", "instance_exec", "instance_of?", "instance_variable_defined?", "instance_variable_get", "instance_variable_set", "instance_variables", "is_a?", "kind_of?", "method", "methods", "nil?", "object_id", "private_methods", "protected_methods", "public_methods", "respond_to?", "send", "singleton_methods", "taint", "tainted?", "tap", "test", "to_a", "to_enum", "to_s", "type", "untaint"]
method is an instance method of the Object class which is inherited by essentially everything. When you call method outside of any explicit class or module definition, you are essentially invoking it as a method of the Object class, and that class is itself an instance of Class, which is a subclass of Object (sorry -- I know that's a bit confusing to follow).
So -- the method method takes a string or a symbol and returns an object encapsulating the bound method of that name on the same object that .method was called on. In this case, that's the test method bound to the Object object.
method(:test).call means call the test method of Object which is what you defined previously via def test ....