A seed record is a symmetric encryption key, a shared secret between a hardware authenticator and an authentication server. The hardware authenticator, sometimes called a token, and the server work together in a time synchronous, or time dependent mode to provide a one-time password that the token holder enters at login.
The way it works is that the seed record is used to encrypt the clock time and the resulting code is used as a password. The server can authenticate by doing the same operation. Since only one device has that seed record, it proves that the person typing in the password possesses the hardware authenticator at the time of authentication.