What does @dimen/activity_vertical_margin do?

@dimen refers to dimension and it's a file where you define dimensions to use them later from in any layout file.

It's located in res/values/dimens. Here's what a sample of the file look like:

 <resources>
    <!-- Default screen margins, per the Android Design guidelines. -->
    <dimen name="activity_horizontal_margin">16dp</dimen>
    <dimen name="activity_vertical_margin">16dp</dimen>
 </resources>

Here activity_veritcal_margin = 16 dp.

and to use it like this:

<LinearLayout
    android:id="@+id/activity_main"
    android:layout_width="match_parent"
    android:layout_height="match_parent"
    android:paddingBottom="@dimen/activity_vertical_margin">

Here we give this linear layout a bottom padding with 16dp.