The hadeeth is referring to offering salutation to the Prophet salla Allahu alaihi wa sallam and that it is one of the highest forms of Thikr.
The hadeeth is disputed among scholars whether it is authentic or not. it seems to me that it is authentic.
Sheikh, , I once read a hadeeth that was something like this: a companion of Prophet Muhammad PBUH asked if he should recite durood and send blessings to Prophet Muhammad PBUH all day long and Prophet Muhammad PBUH said this would be best for you.Can you please explain this hadeeth to me? This surely wouldn’t be counted as ‘dikhr’, would it? And if I recite more durood than do dikhr in a day, is that permissible?