As already mentioned, the two-letter code helps the Disney luggage sorters correctly route your DME-tagged bags.
Just for giggles, here are the 4 DME zones. I'm not including the DVC villas that are an obvious part of another resort:
MK - Grand Floridian, Polynesian, Contemporary, Wilderness Lodge
EC - BoardWalk Inn, Beach Club, Yacht Club, Caribbean Beach Resort
DD - Port Orleans French Quarter, Port Orleans Riverside, Old Key West, Saratoga Springs Resort, Fort Wilderness Resort & Campground
AK - Animal Kingdom Lodge, Coronado Springs Resort, Pop Century, all three All Star resorts
Please chime in if I missed any!