instruction in 8051 assembly
The registers in the 8051 are mapped into the first addresses of the internal RAM like so:

0x00 -> 0x07  ---> Registers R0 to R7 of register set 0

0x08 -> 0x0F  ---> Registers R0 to R7 of register set 1

0x10 -> 0x17  ---> Registers R0 to R7 of register set 2

0x18 -> 0x1F  ---> Registers R0 to R7 of register set 3

Since many of the 8051 instructions can directly address the internal RAM it is possible to compose a MOV instruction that can move data to one of the registers by using its corresponding internal RAM address.

Some compilers or assembly language tool sets will create intrinsic symbols that specify internal RAM addresses. AR0 is an example of this. It is common that AR0 is defined to be 0x00 so that it references the memory location where the R0 register is stored in register set 0. In your example the "USING 1" statement says to use register set 1 so when the subsequent instruction "MOV R0,#1" is encountered it ends up storing the value of 1 into internal memory location 8 whilst the next instruction "MOV AR0,#2" is placing the value of 2 to the address that AR0 represents (most likely 0x00).