It redirects both stdout and stderr. This is directly from the bash man page.
Quote:
Redirecting Standard Output and Standard Error
Bash allows both the standard output (file descriptor 1)
and the standard error output (file descriptor 2) to be
redirected to the file whose name is the expansion of word
with this construct.
There are two formats for redirecting standard output and
standard error:
&>word
and
>&word
Of the two forms, the first is preferred. This is seman-
tically equivalent to
>word 2>&1
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