MD5 itself is an encryption algorithm, but in your case it's the use of this algorithm to generate a signature for an iso file. basically if you grab "redhat-1.iso" from some site, and it's md5 sum doesn't match the officially decalred one, then it's not the real thing. just a securit measure. you can use the utility "mds5um [isofilehere]" to generate it for your own file and see if it matches.
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