Need a VLOOKUP formula explained

Hello all. I'm using Excel 2007 and I'm a novice with with it. I use google when I need help for formulas and shortcuts which is what lead me to this forum. I have a data set that is 7 columns wide and 322,000 rows deep. I needed a formula to find if data in column E matched any data in column A and mark it so I could delete those rows that matched. I came across this formula and copied into my sheet -

=IF(ISNA(VLOOKUP(E1,$A$1:$B$65535,1,FALSE)),"not in A","")

It works and now I am trying to understand basically how the formula works. I do understand the ISNA funtion and the VLOOKUP function as well. The one part I am struggling with is what "$A$1:$B$65535" in the middle of the formula actually is doing. I only what to compare data from column E and column A. I know the $A$1 is the starting point, but what is :$B$65535? Is the code looking beyond the last data point in column A and going to column B:row 65535 for the comparison?

Thanks - Gary

Excellent. Thanks for the explanation