Uniswap v2 swap() function. What are balance0 & balance1? - ethereum

Question

I'm learning how the Uniswapv2 contracts work but I can't seem to wrap my mind around the swap() function.
Reference: https://github.com/Uniswap/v2-core/blob/master/contracts/UniswapV2Pair.sol#L173
Lines 173-174 contain:
balance0 = IERC20(_token0).balanceOf(address(this));
balance1 = IERC20(_token1).balanceOf(address(this));
My question is, when & whose balances are these?
A. These are the same as _reserve0 & _reserve1 after the most recent swap and will be used to synchronize reserves.
B. These are the quantities of each token the user making the swap currently possesses.
C. None of the above. It's something else. Please explain the flow of this function. I cannot find a clear and concise definition anywhere.

Answer 1

answer is "C" :)
balanceOf is a mapping in ERC20 implementation to return the amount that given address holds:
// address => holds uint amount
mapping(address => uint) public balanceOf;
Since current contract is inheriting from UniswapV2ERC20:
contract UniswapV2Pair is IUniswapV2Pair, UniswapV2ERC20{}
it can access to UniswapV2ERC20.sol
Since the mapping balanceOf is public, solidity assigns getters to the public variables
In the functions:
balance0 = IERC20(_token0).balanceOf(address(this));
balance1 = IERC20(_token1).balanceOf(address(this));
address(this) refers to the current contract which is UniswapV2Pair. So balance0 is how much the current contract owns _token0 and balance1 is how much the current contract address owns _token1. token0 and token1 are contract addresses and each ERC20 token contract, keeps track of addresses and their balances. so you are visiting each token contract and getting how much balance the current contract has.
Think ERC20 contract like a bank. you have token0 bank and token1 bank. Each bank keeps track of the balances of their users. balancesOf is where ERC20 tokens store those balances. Your current contract also owns some of those tokens so you just want to get how much tokens the current contract holds
swap function will be called by the user. Before executing the swap, contract checks if it has enough funds
uint amount0In = balance0 > _reserve0 - amount0Out ? balance0 - (_reserve0 - amount0Out) : 0;
uint amount1In = balance1 > _reserve1 - amount1Out ? balance1 - (_reserve1 - amount1Out) : 0;
require(amount0In > 0 || amount1In > 0, 'UniswapV2: INSUFFICIENT_INPUT_AMOUNT');