Spigot "protocol hack", is a version of spigot which allows 1.8 and 1.7 players into a 1.7 version of spigot. It's not really a hack, and just more code.
Before the "real" spigot 1.8 update was released, the spigot developers wrote a quick edit in the code which allowed 1.8 clients to join a 1.7 server - thus it gained this name. It's outdated and should not be used.