It is the authentication key for OSPF exchanges. Analogous to a OSPF password. All neighbor routers that wish to exchange OSPF table information will need this key configured. You can have multiple keys for multiple OSPF segments.

This is considered a best practice and provides a level of security against someone exploiting OSPF packets for DoS or other attacks. However, it can be argued that if they get far enough into your network to exploit OSPF, they already own you.