From the URL activity settings page
This secret phrase is used to produce encrypted code value that can be sent to some servers as a parameter. The encrypted code is produced by an md5 value of the current user IP address concatenated with your secret phrase. ie code = md5(IP.secretphrase). Please note that this is not reliable because IP address may change and is often shared by different computers.
Could someone explain this in plain English please so I can document it in plain English? (I'm sure TIm explained something similar before and I recall merely copying and pasting his words) Is it something to do with adding a password so that users who click on the URL can get straight to a password protected site? Or am I off target?