This is because Java uses Call by Object-Sharing* (for non-primitive types) when passing arguments to method.
When you pass an object -- including arrays -- you pass the object itself. A copy is not created.
If you mutate the object in one place, such as in the called method, you mutate the object everywhere! (Because an object is itself :-)
Here is the code above, annotated:
public static void main(String[] args)
{
int[] arr = new int[5]; // create an array object. let's call it JIM.
// arr evaluates to the object JIM, so sets JIM[0] = 1
arr[0] = 1;
System.out.println(arr[0]); // 1
method(arr); // fixed typo :-)
// arr still evalutes to JIM
// so this will print 2, as we "mutated" JIM in method called above
System.out.println(arr[0]); // 2
}
private static void method(int[] array)
{
// array evaluates to the object JIM, so sets JIM[0] = 2
// it is the same JIM object
array[0] = 2;
}
Happy coding.
*Primitive values always have call-by-value semantics -- that is, a copy is effectively created. Since all primitive values are immutable this does not create a conflict.
Also, as Brian Roach points out, the JVM only implements call-by-value internally: the call-by-object-sharing semantics discussed above are implemented by passing the value of the reference for a given object. As noted in the linked wikipedia article, the specific terms used to describe this behavior differ by programming community.
Additional:
Pass by value or Pass by reference in Java? -- see aioobes answer and how it relates with Brian Roachs comments. And aioobe again: Does array changes in method?
Make copy of array Java -- note this only creates a "shallow" copy.