What does the \x1a characters mean

\x1A is CTRL+Z control character. It is also EOF marker.

\x1a is a SUB control character, used to mark end of a file (EOF).

It's a Unicode escape sequence, in hexadecimal (base 16). \x1a is the "substitute" character.

See also: https://en.wikipedia.org/wiki/Substitute_character

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Why does mysql_real_escape_string escape it?

According to the documentation,

Strictly speaking, MySQL requires only that backslash and the quote character used to quote the string in the query be escaped. mysql_real_escape_string() quotes the other characters to make them easier to read in log files.

It is a hexadecimal escape sequence for the SUB character.