angular.identity function is return the value passed in as a argument.

In the below example:

 $scope.square = function (n) {
        return n * n
    };

   function transformer(transformationFn, value) {
        return (transformationFn || angular.identity)(value);
    };
   

       $scope.initVal = 5;
  1.  $scope.squareResult = transformer($scope.square, $scope.initVal);  //25
   2.  $scope.squareResult = transformer(null, $scope.initVal);  //5

In first statement  it will return 25 from square function when we pass $scope.square in transformer as first parameter.
When u call the  transformer function as null in first parameter  then it return 5 from angular.identity(5)

If u think it resolve your query then mask as answer.