The following pseudo-code is from the first chapter of an online preview version of The Algorithm Design Manual (page 7 from this PDF).
The example is of a
1) The description states that every vertex always belongs either to a "single-vertex chain" (i.e., it's alone) or it belongs to one other chain; a vertex can only belong to one chain. The algorithm says at each step you select every possible pair of two vertices which are each an endpoint of the respective chain they belong to, and don't already belong to the same chain. Sometimes they'll be singletons; sometimes one or both will already belong to a non-trivial chain, so you'll join two chains.
2) You repeat the loop n times, so that you eventually select every vertex; but yes, the actual iteration count isn't used for anything. All that matters is that you run the loop enough times.