Why MDS stands for minimum discernible signal, sometimes called minimum detectable signal. It is essentially the receiver's noise floor: the weakest signal that produces a detectable output above the receiver's own internally generated noise, conventionally the level that raises the output about 3 dB above the noise. It is calculated from the thermal noise floor of -174 dBm/Hz plus the receiver's noise figure plus 10 log of the bandwidth in hertz, so narrower bandwidth and lower noise figure both improve (lower) the MDS.
Watch out The choices about meter sensitivity and modulation distortion are just plausible-sounding expansions of the letters; MDS is a sensitivity specification, not anything to do with an S-meter display or distortion measurement.
MDS = Minimum Discernible Signal = the noise floor. Think -174 dBm/Hz + NF + 10 log(BW).