It's a type of AI or workflow that sits on top of Nostr. You engage with it, and it returns some kind of data. The acronym means Data Vending Machine.

In practice you could have any kind of request return any kind of response (like a DVM could use an AI to return some image or text, or translation), but what the OP is talking about here are DVMs that act as "algorithms" to return different types of event feeds.

A few of these I've used are like "show me the most popular posts by people I follow since I last logged in", or "show me global most zapped posts over the last 24 hours", etc.

It's very cool and useful that there will be a market for these algos, so you can really tailor your Nostr feed to what you like.