Direct Media Object
Aka. MS DMO API, it is an API for various codecs and other Direct Media Objects.
Integration in VLC
Using DMO, VLC media player can use external codecs to read video it would not be able to without, for example many Windows Media codecs that vlc has no native plugin for, like Microsoft Screen codecs or Microsoft Image codecs.
Use it with the --codec dmo switch from command-line or activate it in the preferences (Tools -> Preferences... and Show settings: All and Input/Codecs -> Other codecs and tick Prefer system plugins over VLC, press Save and restart VLC after the change).
Under linux, you can use them with the --enable-loader switch that uses Wine's emulation. You have to put the Windows Media dlls in the /usr/win32 folder.