What a hash is
An MD5 hash is a 32-character string of hexadecimal digits computed from any input, whether that input is a short word or a very large file. The same input always produces exactly the same hash, and even a tiny change to the input produces a completely different one. This makes MD5 useful for confirming that a file or a piece of text has not changed, for example after a download.
Worked example
The text "abc" hashes to 900150983cd24fb0d6963f7d28e17f72. This is one of the most widely published MD5 test values, so it is a good way to confirm the tool is computing hashes correctly. An empty input also has a well-defined hash, d41d8cd98f00b204e9800998ecf8427e, which is shown normally rather than treated as an error.
Text and files
You can hash either typed text or an uploaded file. Text is converted to its UTF-8 bytes before hashing, the same correctness step Base64 uses, so accented letters and other non-English characters hash consistently. Files are read and hashed in chunks rather than all at once, so even a large file does not need to be loaded entirely into memory before hashing can begin.
Security note
MD5 is fast and convenient for checking that data has not changed by accident, but it is not considered secure against a deliberate attacker: it is possible to construct two different files with the same MD5 hash. For security-sensitive purposes such as verifying a password or a security-critical download, a modern hash from the SHA-2 family is the appropriate choice instead.