`in` λ `xs. aux (0, xs)`
This may be a bit confusing. What we have here is a helper function `aux` (for "auxiliary") that accepts *two* arguments, the first being a counter of how long we've counted in the sequence so far, and the second argument being how much more of the sequence we have to inspect. If the sequence we have to inspect is empty, then we're finished and we can just return our counter. (Note that we don't return `0`.) If not, then we add `1` to the counter, and proceed to inspect the tail of the sequence, ignoring the sequence's first element. After the `in`, we can't just return the `aux` function, because it expects two arguments, whereas `length` should just be a function of a single argument, the sequence whose length we're inquiring about. What we do instead is return a λ-generated function, that expects a single sequence argument `xs`, and then returns the result of calling `aux` with that sequence together with an initial counter of `0`.
`in` λ `xs. aux (0, xs)`
This may be a bit confusing. What we have here is a helper function `aux` (for "auxiliary") that accepts *two* arguments, the first being a counter of how long we've counted in the sequence so far, and the second argument being how much more of the sequence we have to inspect. If the sequence we have to inspect is empty, then we're finished and we can just return our counter. (Note that we don't return `0`.) If not, then we add `1` to the counter, and proceed to inspect the tail of the sequence, ignoring the sequence's first element. After the `in`, we can't just return the `aux` function, because it expects two arguments, whereas `length` should just be a function of a single argument, the sequence whose length we're inquiring about. What we do instead is return a λ-generated function, that expects a single sequence argument `xs`, and then returns the result of calling `aux` with that sequence together with an initial counter of `0`.