$1, $2 refers the capturing groups.
$1 means first capturing group
$2 means first capturing group
…. etc.
These are mainly used for replacement. Lets see an example
We have a string "We should learn" and we want to replace the should to will.

var str1 = "We should learn";
var str2 = str1.replace( /(\w+) should (\w+)/, "$1 will $2" );
console.log(str1);
console.log(str2);

OUTPUT:
We should learn
We will learn

Explanation :
Through replace() method we can replace some portions of a string with another string.
/(\w+) should (\w+)/ refers the actual string We should learn. There are two capturing groups (\w+), (\w+) and in regex “$1 will $2“ , $1 refers We and $2 refers learn. We replace We and learn as it is but change the word should to will.