$ - Last Two As Monad
The resulting link is monadic, meaning it takes one argument. Note that the arity refers to that of the resulting link, not the number of links this quick consumes.
Combine two links (that aren't part of an LCC) into one monad.
Scanning backwards, if the chain starting at that point is not an LCC, increment a counter. Once the counter reaches two, return those links combined into a monad.
<link><link>$- combine links into one monad