The '\r' stands for "Carriage Return" - it's a holdover from the days of typewriters and really old printers. The best example is in Windows and other DOSsy OSes, where a newline is given as "\r\n". These are the instructions sent to an old printer to start a new line: first move the print head back to the beginning, then go down one.
Different OSes will use other newline sequences. Linux and OSX just use '\n'. Older Mac OSes just use '\r'. Wikipedia has a more complete list, but those are the important ones.
Hope this helps!
PS: As for why you get that weird output... Perhaps the console is moving the "cursor" back to the beginning of the line, and then overwriting the first bit with spaces or summat.