String in Java is object, so it should be reference?
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The object's reference is passed to the method and assigned to the parameter, which is a kind of local variable.
Assigning a different object reference to the parameter does nothing to the variable outside the method that held a reference to the original object.
Also String is immutable, so there's no way to change its value (for example a setValue() method).
The line str = "welcome"; doesn't change the value of any String - Strings can never change their values. What it does is it makes one reference point to a different String. But the reference that it reassigns is the one that's local to changeStr , not the one that is declared in main .
String is a reference, but the key is that String str inside changeStr is a different reference than str in main. Add that to the fact that strings are immutable in Java (meaning that when you change a String, the reference points to a different location in memory) and that explains why main will print 1234