MD5 is a pretty fast one-way cryptographic hash function which has several purposes in computer programs. Developed in 1992 by Ronald Rivest, it converts any input length string of bytes to a 128 bit output value, which is usually represented as a 32 character hexadecimal number such as 5d41402abc4b2a76b9719d911017c592, which happens to be the "md5 hash" of the word "hello".
In modern times, while it is not recommended to use MD5 for sensitive security issues such as password hashing, it is still most often fine for simple and quick validation. For more information, see this wikipedia article on MD5.