A master is a demo/song that was taken from the actual studio reel. Instead of being passed down from trader to trader and losing any good sound quality it had, it was recorded directly from the studio master tapes. You can tell instantly if what you have is a master recording; the quality is phenomenal. No hiss, distortion, or anything; it's perfectly clear.
Good luck in getting any new masters, though, people are being quite stingy about trading them.
I do agree with you on the labeling issue! Lord knows, I've gotten things that were labeled as outtakes, when in all actuality it's a sparse piano demo!! You can tell if it's an outtake if it sounds almost fully produced in the studio. You can tell a demo from anything: it's usually got a bad vocal (sorry!) and some fumbling and sparse instrumentation. It doesn't sound produced at all.
Hope this helps!