MD5 (Message Digest Algorithm) is a CryptographicHash algorithm.
The algorithm takes as input a message of arbitrary length and produces as output a 128-bit "fingerprint" or "message digest" of the input. It is conjectured that it is computationally infeasible to produce two messages having the same message digest, or to produce any message having a given prespecified target message digest. The MD5 algorithm is intended for digital signature applications, where a large file must be "compressed" in a secure manner before being encrypted with a private (secret) key under a public-key cryptosystem such as RSA.1?
Basically MD5 is an easy way to verify the integrity of a piece of data.
Some common uses of MD5 are for
http://userpages.umbc.edu/mabzug1/cs/md5/md5.html
From 
RFC:1321
This document describes the MD5 message-digest algorithm. The algorithm takes as input a message of arbitrary length and produces as output a 128-bit "fingerprint" or "message digest" of the input. It is conjectured that it is computationally infeasible to produce two messages having the same message digest, or to produce any message having a given prespecified target message digest. The MD5 algorithm is intended for digital signature applications, where a large file must be "compressed" in a secure manner before being encrypted with a private (secret) key under a public-key cryptosystem such as RSA.
The MD5 algorithm is designed to be quite fast on 32-bit machines. In addition, the MD5 algorithm does not require any large substitution tables; the algorithm can be coded quite compactly.
The MD5 algorithm is an extension of the MD4 message-digest algorithm. MD5 is slightly slower than MD4, but is more "conservative" in design. MD5 was designed because it was felt that MD4 was perhaps being adopted for use more quickly than justified by the existing critical review; because MD4 was designed to be exceptionally fast, it is "at the edge" in terms of risking successful cryptanalytic attack. MD5 backs off a bit, giving up a little in speed for a much greater likelihood of ultimate security. It incorporates some suggestions made by various reviewers, and contains additional optimizations. The MD5 algorithm is being placed in the public domain for review and possible adoption as a standard.
8 pages link to MD5:
