A Document Type Definition (DTD) is a specific document defining and constraining definition or set of statements that follow the rules of the Standard Generalized Markup Language (SGML) or of the Extensible Markup Language (XML), a subset of SGML. A DTD is a specification that accompanies a document and identifies what the funny little codes (or markup) are that, in the case of a text document, separate paragraphs, identify topic headings, and so forth and how each is to be processed. By mailing a DTD with a document, any location that has a DTD "reader" (or "SGML compiler") will be able to process the document and display or print it as intended. This means that a single standard SGML compiler can serve many different kinds of documents that use a range of different markup codes and related meanings. The compiler looks at the DTD and then prints or displays the document accordingly.
As a matter of fact, the document you are looking at is coded in a particular DTD called HTML. In this case, the "compiler" or document handler is your Web browser which is designed to handle text documents encoded with HTML tags. (Other programs could be developed that would handle HTML and other DTDs as well.)
IBM and many large and small corporations are converting documents to SGML or, more recently, to XML, each with its own company document type definition or set of definitions. For corporate intranets and extranets, the document type definition of HTML provides one new "language" that everyone can format documents in and read universally.