It should be redirecting to index.php as long as a number of conditions are met:

rewritecond $1 !^(index.php|public|tmp|robots.txt|template.html|favicon.ico|images|css|uploads)
As long as the requested url does not start with one of: index.php, public, tmp, robots.txt, template.html, favicon.ico, imagesloss, uploads and,

rewritecond %{REQUEST_FILENAME} !-f
rewritecond %{REQUEST_FILENAME} !-d
As long as the requested url is not an existing file or directory

Then:
rewriterule ^(.*)$ index.php?link=$1 [NC,L,QSA]
Rewrite the url to index.php?link=REQUESTED-URL (along with any other url variables) and stop processing

So you should be seeing urls something like index.php?link=page.php or similar if the conditions above are met.
robots.txt is not being redirected since it is being specifically excluded in the first line.

Think I got that right, hope it makes sense!