It is explained on page 4 of the documentation.
Vm is the power supply pin for the chip and the steppers. It takes +7.2 to +16.5 vdc.
Vd is used for a clamping diode between pins 1 and 16.
Any time you turn power on then off with a coil in a circuit (the motors), you will get back voltage returned from the coil. This voltage can rise pretty high and spike components in that circuit if not dealt with.
If you look at figure 12 on page 9 you can see the voltage will be returned to the supply + side.