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RHN stands for "Red Hat Network". It refers to the set of servers that Redhat provides for RHEL customers to get updates from (presumably using the up2date tool).
The rhnsd daemon takes care of regularly contacting the RHN to see if updates are available. It reports its findings to the "Red Hat Network Alert Notification Tool" (the sometimes red pulsating circle at the top right in the upper GNOME panel).
- Red Hat Network tour (searchenterpriselinux.techtarget.com)