A release candidate is a milestone build submitted by a developer as a gold master, but which requires testing to ensure that it is. They happen very late in the game development cycle, and often several are submissions are needed before the game finally passes the publisher's and platform's requirements.
Release candidates should not fail for reasons of wanting to include new features or content, but it's not unknown for nervous publishers to do this. More commonly they fail because of unusual bugs, compatability issues with unusual versions of the host platform, or failing one or more items on a technical requirements checklist. Fixes are usually short, so multiple release candidates might be submitted in a single iteration to address each in turn.
Release candidates are preceded by prototypes, pre-alphas, alphas and betas. They are followed by gold masters.