It is what it says it is - a VPN (virtual private network) indicator. I use it every day to connect to the office. The VPN gives me a secure, encrypted tunnel through a potentially insecure public network (like a cafe or airport).
That indicator changes when you're connected, and optionally you see how long you've been connected alongside it.
This is only for Apple's built-in VPN; there are others like Cisco AnyConnect, that use different encryption protocols; those don't use that icon. You must have a VPN set up on your computer for that to appear (SystemPreferences->Network, in the left hand column)