Let me explain in simple words,
set seed (value) where value specifies the initial value of the random number seed.
In the above line,123 is set as the random number value.
The main point of using the seed is to be able to reproduce a particular sequence of 'random' numbers. and sed(n) reproduces random numbers results by seed.
For more information for set.seed() read below pdf of few pages that explains all about set.seed() in detail.
When the k-means clustering algorithm runs, set.seed() is used a randomly generated seed to determine the starting centroids of the clusters.