is a wildcard character (see the appendix near the back for the manual for a full list of them & their meanings). When using wildcards, if you want to match a literal # you have to put a ' (single quote) before it to escape it.
Here's the filter to use when synchronizing if you want to ignore everything in and below a folder called #recycle:
(Aside: When using filters for Find and other tasks (but not Synchornize), you can do this a bit better using a single Subfolder clause in the filter. More about that here.)