The technique is called DNS-0x20 encoding, in reference to the hexadecimal number 0x20 (32 in decimal) and its relationship to ASCII characters. Its binary representation (0b100000) has all of its bits set to zero except for the fifth, counting from zero – which for ASCII characters determines whether a letter is upper or lower case. For example, 01000001 (65 in decimal) is the ASCII code for an upper-case A, while 01100001 (decimal 97) is the ASCII code for a lower-case a.

Described in more detail in an an academic paper [PDF], DNS-0x20 encoding expands the range of possibilities an attacker must guess without confusing the resolution of DNS names and IP addresses.

Essentially, you randomly toggle the 0x20 bit in a query to jumble up the case, send that out to be resolved, and expect the response to have the same matching case. If the cases don't match, you may be caught up in a cache poisoning attack, as the attacker won't know which case bits will be set or cleared by you when doing their poisoning.