Manual:$wgSecretKey

Details
This should always be customized in LocalSettings.php

This value is used as cryptographic entropy when generating user_token's to insert into the users table which is used as a persistent cookie for authentication that is resilient to spoofing.

Update
According to a 14 October 2012 email by Daniel Friesen: Right now $wgSecretKey is 99% worthless. We aren't using it directly anymore. We now generate all tokens with proper cryptographic random sources. So we don't base security off keeping a string secret anymore. ((That %1 is from the fact that if you have no access to urandom or are on old php, no mcrypt random, and no openssl random we do use $wgSecretKey as a very small source of entropy, but it's of barely any value most of our entropy comes from clock drift in that case.))

At the same time it's worth noting the warning about user_token. It does not apply to any new user_token but old user_tokens for users who have not updated their passwords resulting in the reset of user_token on wikis that have not done a full reset will still be somewhat vulnerable to $wgSecretKey leaks.

$wgProxyKey
From 1.3 to 1.4, $wgProxyKey was the documented setting for this. In 1.4, this was marked as deprecated in favor of $wgSecretKey.