This option should contain a semicolon separated list of link target titles and target names separated by =. The titles are the ones that get presented to the user in the link target drop down list and and the target names is the target that gets inserted as a target attribute.
Example of usage of the theme_advanced_link_targets option:
tinyMCE.init({ ... theme_advanced_link_targets : "Some frame=someframe;Some other frame=otherframe" });