Each “letter” is the topological representation of the corresponding letter of the English alphabet.

So A becomes O because it has one closed loop, B becomes 8 because it has 2 loops, C becomes | because it has no loops, etc.

not a topologist so this may not be accurate but as far as i understand it topology is the study of the proprieties of shapes that don’t change when the shape is warped, so an A for example only has one hole which makes it equivalent to a circle, a C never closes so it’s a straight line.
There’s no doubt way more nuance that i don’t know but that’s what’s needed to understand the joke here