Sounds develop harmonics in multiples of the fundamental frequency. Even-order harmonics sound warm and pleasant while odd-order harmonics are generally unpleasant to listen to. Odd-order harmonics are produced by clipping (the top or bottom of a waveform is abruptly cut off) and interfere with the 3rd and 5th harmonic of the fundamental.
This measurement is taken at an SPL of 90dB with a microphone placed 1 meter from the speaker. The specification is presented as the ratio (%) of the sum of all the harmonic power present compared to the SPL of the fundamental frequency.
For example, the R5 produces <0.3% THD for the frequencies from 120Hz to 20kHz. A THD below 1% is considered acceptable.