| is used to set a certain bit to 1

& is used to test or clear a certain bit

Set a bit (where n is the bit number, and 0 is the least significant bit):

  unsigned char a |= (1 << n);

Clear a bit:

  unsigned char b &= ~(1 << n);

Toggle a bit:

  unsigned char c ^= (1 << n);

Test a bit:

  unsigned char e = d & (1 << n);

Take the case of your list for example:

  x | 2 is used to set bit 1 of x to 1

  x & 1 is used to test if bit 0 of x is 1 or 0