An alternative definition of the given blow-up is the following. Take $\mathbb{C}^2\times\mathbb{CP}^1$ with coordinates $((z,w),[s:t])$ and take the submanifold $X=\{zt=ws\}$. We can restrict the projection $\pi:\mathbb{C}^2\times\mathbb{CP}^1\to\mathbb{C}^2$ to $X$, obtaining $\pi_X:X\to\mathbb{C}^2$.
We note that $\pi_1((z,w),[s:t])=(z,w)$, but if $z\neq0$ (or $w\neq 0$), then $zt=ws$ implies that $t=ws/z$ (or $s=zt/w$), hence $[s:t]$ is determined by $(z,w)$ if $(z,w)\neq(0,0)$. That is to say, $\pi_X:X\setminus \pi^{-1}((0,0))\to\mathbb{C}^2\setminus\{(0,0)\}$ is a bijection (and actually a biholomorphism).
What is the set $\pi^{-1}((0,0))$? Well, if $z=w=0$, then the equation $zt=ws$ is true for every choice of $[s:t]\in\mathbb{CP}^1$, hence $\pi^{-1}((0,0))=\mathbb{CP}^1$.
Now, let us show that this is the same as your definition (the affine part, at least): consider the mapping $F:X\to\mathbb{CP}^2\times\mathbb{CP}^2$ given by $F((z,w),[s:t])=\{[zs:t:s],[s:tw:t])\}$ then, as $zt=ws$, we have that $w=zt/s$. Hence, the image of $F$ in the affine set $s,t\neq 0$ is given by the equations $s=1/t$ and $y=tx$.
The last space, $F(X)$, can be easily seen to be biholomorphic to the gluing you defined in the question: take the maps $f_1, f_2:\mathbb{C}^2\to\mathbb{CP}^2\times\mathbb{CP}^2$ given by $f_1(a,b)=([a:b:1],[1:ab^2:b])$ and $f_2(a,b)=([a^2b:1:a], [a:b:1])$; they are charts for $F(X)$, indeed they are injective and holomorphic and $f_2^{-1}f_1(a,b)=(1/b, ab)$, if $b\neq0$. Every manifold is obtained by gluing the charts with the relations induced by the transition functions, therefore, the described quotient is exactly the blow-up we described in the beginning.
As for the geometric meaning, the blow-up of $\mathbb{C}^2$ at a point can be viewed as the following operation: we erase the point and in some way we separate the directions stemming from the point, by inserting, in the place of the point, the manifold (a $1$-dimensional manifold in this case) corresponding to all the possible directions from the point (which is, actually, the normal bundle of the point as a submanifold of $\mathbb{C}^2$); such a set of directions corresponds to $\mathbb{CP}^1$ (indeed, as the line at infinity of $\mathbb{CP}^2$, the complex projective line is exactly the possible directions of a line in the complex projective plane).
You could imagine it as the plane spiraling up, like an helicoidal shape, but in the end the fiber over the origin (the center of the helicoid has to be compact... so it is actually a bit hard to figure in your mind.
Please, if this helped you, feel free to ask if you want me to be more specific on some aspect.