As pelago says, it's not a general Linux term but a term specific to tablets.

It switches on some debugging features that are not needed by end-users and can potentially harm the device and the user experience. The wiki article on it outlines some of these features, but, in summary:

• It satisfies the R&D mode check for the sudo gainroot script, allowing you to get root access without modifying this script (as packages like rootsh do).
• The power button will turn on the device with only a single press instead of the long-press normally required.
• Additional information about the device and the OS version installed will be shown on the boot splash.
• The serial console pins inside the battery compartment may be enabled.

Back in the Bad Old Days people used it to gain root access as there were no simple packages available to work around the script check.

But, you, specifically, wouldn't, as even if you need root there are nice things like rootsh to get you root access without all of the potentially dangerous features of R&D mode.

You might as well ask how a mechanic knows that the average person probably doesn't want to take their valve cover off. . . .

Again, as pelago says, it's the superuser account that has complete and total access to all areas of the operating system. With root, you can do many things that are not possible with only a regular account (like brick your device).