If you look at the structure of the equation for several letters, you will see a pattern emerging, e.g. for 3 letters
z_1^2 \, z_2^2 \, z_3^2 \, + \, w^2 \, = \, 0
where
z1 is a formula for the first letter,
z2 is a formula for the second letter,
z3 is a formula for the third letter, and
w is always the same each time, and all of them functions of
x and
y.
Note that the equation is true if and only if
w is zero and at least one of the other expressions is zero.
w is zero if 2 \leq y \leq 4 and otherwise non-zero, so the effect of adding
w2 is to prevent any curves being drawn above
y=4 or below
y=2. In the case of a circle ("O") it doesn't matter, but for some of the other letters, the formula given creates the correct symbol between heights 2 and 4 but also creates extra lines outside that range, so adding
w2 suppresses the unwanted lines.