It's used as an American slang word meaning "to confuse". I've never heard it used as a verb either as it only applies to "American English" so technically they broke "American English". This gets weirder because the USA does not recognize English as an official language at the federal level so this sentence breaks a language that's an off shoot of an original language with neither "English" or "American English" being owned by people or it's government. It's currently like breaking Klingon or "Elvish".
Oh! My friend told me this last year! He even explained, step by step, word by word, what exactly it meant. Though I can't no longer remember how exactly it went...
Buffalo Buffalo buffalo buffalo Buffalo buffalo buffalo buffalo buffalo Buffalo buffalo buffalo Buffalo buffalo buffalo.
Buffalo (adj.) = from Buffalo, New York
buffalo (adj.) = a spicy meat flavoring
buffalo (n.) = a big woolly animal thing
buffalo (vb.) = to bully/intimidate
So it's essentially saying...
"Spicy New York animals [that] spicy New York animals bully [also] bully spicy New York animals [that] spicy new york animals bully."
Buffalo (adj.) = from Buffalo, New York
buffalo (adj.) = a spicy meat flavoring
buffalo (n.) = a big woolly animal thing
buffalo (vb.) = to bully/intimidate
So it's essentially saying...
"Spicy New York animals [that] spicy New York animals bully [also] bully spicy New York animals [that] spicy new york animals bully."