The right transistor, inductor and two caps form a Colpitts type oscillator that generate the actual radio waves. The left transistor is just an audio amplifier which will amplify the signal and feed it to oscillator.
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EDIT : This is an AM transmitter, not a FM transmitter.
It may work with a cheap (and old) FM receiver, but probably not with a modern one. This circuit design is very old.
Sure, it will transmit in the FM band. Problem is that most modern FM receivers use balanced detectors which will ignore AM. Older ones used a simple FM detector (slope detector) that was much more sensitive to AM.
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Antenna of 8"-10" inches is required at collector of oscillator for circuit to transmit.
A.C source can be replaced by mic.
Input signal frequency is selected 10Mhz otherwise the oscillations would not be visible. The circuit will also work in audible frequency range in practice but not in simulation due to simulation speed issues.
