Basically, the server initially knows nothing about your connection, other than it sees a valid donation number for that server. You let it know what MAC you want it to accept (which starts with "00:1A:78") via the donation checker. On the add-on you enter the server you were assigned, the MAC that you wanted the server to see, and if required, device info (Serial Number, device id, and optionally device_id2 and signature). The server should store that device info so when you reconnect again, it knows that you are a valid account.
If these don't match up, you will get an "Authentication Error", but you can reset the connection details on the donation checker by changing the MAC or by clicking "IPTV Reset".