mirror: true means that Caffe will randomly flip the images horizontally - see the relevant lines in data_transformer.cpp
here and
here. Depending on what you mean by the training set being expanded: no, the actual
volume of the set stays the same - the transformation is done on the fly, after the data has been loaded into memory - but yes the network will see more examples than it normally would have. It is a disk-space-efficient method of data augmentation, as you only store each example once but produce multiple versions of it during the training.