The Donut Effect
In PE terms a donut (or doughnut, if you happen to like silent letters) is an inflammation behind the glans of circumcised people. This inflammation looks a little like a ring donut has been grafted under the skin encircling the penis behind the glans, hence the name. The uncircumcised equivalent is a gross fattening of the prepuce such that retraction may be painful and the penis may look a little snub nosed.
A very graphic example (with gory pictures) is available in the thread Go Easy, I’m New (the pic is on page 3). For an uncircumcised view, check out Walkingman's donut effect photo.
A donut will not necessarily present as a complete ring, rather a bulge on one side. In manual PE it is a sign of overdoing things especially with girth exercises. In hanging it is possible to cause a donut at the point of attachment as a reaction to pressure. Overwhelmingly the biggest cause of donuts is in pumping where high vacuums or long periods are particularly likely to cause the problem.
Donuts are possible outside PE of course: grinding away for hours or even the friction of badly fitting underwear are possible culprits.
The inflammation is the collection of lymph fluid underneath the skin and will recover without intervention in a day or two. Constantly pushing to the point of inflicting a donut is not generally a good idea (unless it's a personal fetish) they seem easier to produce the more they are produced, and as a habit it will frustrate PE.
If you find you are becoming prone to donuts, you will pretty quickly also work out the threshold of intensity at which they are likely to occur. The trick is then to stay under this threshold. Alternatively (or possibly in addition to) this there are other methods e.g. Donut Prevention - One Solution, where the suggestion of wrapping post pumping session is made. Yet another alternative is to pump in a strong condom.
To sum up. Donuts are nasty but not life threatening, so if you get one be patient and it will disappear. If you continually get them, this is a problem with your PE and you may need to ease off a great amount for some time.