THD (total harmonic distortion)
How much harmonic content a device adds to a pure tone, expressed as a fraction of the fundamental.
The test is simple: feed in a sine, usually 1 kHz, and compare the energy at its integer multiples — 2 kHz, 3 kHz and up — with the energy of the fundamental. The result is quoted as a percentage or in decibels. THD+N lumps in noise and everything else that isn't the fundamental, and it's the figure most datasheets actually report.
In the 1970s the number became a sales weapon, with Japanese amplifiers racing towards thousandths of a percent, far below anything audible. It also says nothing about which harmonics are present: the even harmonics of a valve stage sound warm, the odd ones from clipping sound nasty, and both can produce the same THD. A DAC with the better spec can still sound worse.