It's not a typo. It is a short form for "moderator pro-tempore", not "temp". While they mean the same thing, it's correct as written.
Pro-tems are those moderators selected by Community Managers and the like when a site is in the beta stage. Once the site graduates, then an election happens, and moderators are elected.
Since pro-tems might not go on to be elected (either by choice, because they don't run in the election, or by the fact that they aren't elected by their community), it's considered to be a temporary thing (as election on a graduated site is for life, unless you step down (with some exceptions for egregious behaviour and the like).
The "through site graduation" refers to the fact that a site might take less than a year to graduate, so if the site graduates before a year has passed since you were selected as a moderator, they have that caveat about "through graduation" - meaning that you serve from site start to the graduation point (where that is less than one year).
For more ideas on how the whole pro-tem thing works, this blog post dealing with the election of pro-tems in the early days of the network and this blog post about moderation as a whole might come in handy.