The output of this code is `'bar'`. This demonstrates function declaration hoisting in JavaScript. Even though the function `bar` is declared after the `return` statement, function declarations are hoisted to the top of their containing scope during the compilation phase. This means that `bar` is already defined and accessible when `return bar();` is executed. Functionally, the code behaves as if it were written with `bar` defined before it's used:
```javascript
function foo() {
function bar() {
return 'bar';
}
return bar();
}
```
This is different from code after a `return` statement, which is indeed unreachable but doesn't cause a syntax error. The placement of the function declaration after the return doesn't matter—it's hoisted and fully available throughout the function body. This behavior of function declarations is why they can be called before they appear in the source code, unlike function expressions, which follow variable hoisting rules.