Reynolds number is air density x true airspeed x wing chord divided by the air's viscosity. (Viscosity is a measure of the "stickiness" of a fluid. Alcohol has a lower viscosity than honey.)
More to the point, the Reynolds number is a measure of how "fine grained" the turbulence of the airflow is. At very low speeds, fluid flow is laminar, that is, it flows in smooth layers. At higher speeds (i.e., higher Reynolds numbers) the flow becomes increasingly turbulent at increasingly smaller dimensions.
Aifoils behave differently at different Reynolds numbers; in general you get a higher stall angle and correspondingly higher lift from an airfoil at higher Reynolds numbers. You can see this from most airfoil performance charts, like those in Theory of Wing Sections.
Each .AFL file has a Reynolds number. When you create a .AFL, you should enter the Reynolds number that's given for the airfoil chart you're using. X-Plane computes the Reynolds number for each airfoil section as you fly. If you've specified two different airfoils for the high and low Reynolds number entries (PlaneMaker Special -> Foils), X-Plane will compute airfoil performance from the two airfoils by interpolating according to the current Reynolds number. For example, if your current Reynolds number is halfway between the Reynolds numbers of the two airfoils, X-Plane will take the average of their performance.
OK... How important is this? Not very, in my opinion. It's a lot of work, and it requires the actual airfoil data. Further, some of the regions of the airfoil performance range where the difference matters will never be used in most circumstances. The most obvious example is stall angle. You are likely to stall the aircraft at low speeds. However, high speed stalls are unlikely, especially in a passenger plane. (You'll get the passengers seriously upset, and you risk ripping off the wings.) Conversely, low AOA drag is more of an issue at the higher speeds. Meanwhile, the lift curve for moderate AOA values is normally independent of Reynolds number.
So in most circumstances you're just as well off with a single
airfoil for the entire speed range. Use the high speed Cd values for
low AOA area, and set up the stall region to match the low Reynolds
number. The Reynolds number you enter for the airfoil is unimportant
when there's only one airfoil for the entire range.