The method that is required to make monospace distance field fonts that display correctly is... interesting.
The following method works for Inconsolata-LGC-Square2.ttf , in this folder. Any other fonts are likely to require
at least some changes to the specific numbers. Instructions are for Windows, because BMFont doesn't run natively on
Linux or Mac OSX, but you can use Wine to run BMFont on a non-Win32 OS, and any changes are likely to only be related
to the usage of semicolons to separate classpath jars on Windows and colons to separate them on Linux (and OSX?).

Steps:
1:
Download a LibGDX nightly .zip from relatively recently; these steps were done on the 12-31-2015 nightly and should
probably be unchanged in similar versions or in the 1.7.2 .zip distribution. Unzip the archive where you can easily
access it on the command line. Also, install the TTF font you want to make into a distance field font. If all you have
is an OTF font, it needs to be converted to TTF for BMFont to use it; there are plenty of online converters out there.
2:
First we need to generate the .fnt file with the positions and glyphs exactly where we want them for the final image.
There will be a PNG generated with this .fnt, but it only matters as a reference for determining the correctness of the
distance field font we generate later.
3:
Run BMFont, open Font Settings (shortcut is [F]) and select your font's name in the dropdown box. The size should be
larger than normal for text, enough to almost completely fill a 1024x1024 texture with all the glyphs you want in the
font. You will probably need to come back to the font size in a bit and tweak it to fit. You will need to have the size
you end up using noted for later; this step generates the ideal size for the .fnt, and to match the ideal size for the
.png later, we will need an exact multiple of the size we use here. Match char height should be unselected, do not
include kerning pairs should be selected, and font smoothing and super sampling must be deselected. In most cases
(individual fonts may have their own needs), render from TrueType outline and TrueType hinting should be selected, if
only to keep continuity with the later steps that need these, and to ensure the sizes match up between the .fnt and the
altered .png we will make later. Outline thickness should probably be 0 unless you have a very good reason to change it
(hairline fonts need it higher, but most fonts should have it firmly at 0).
4:
In BMFont, change the Export Settings (shortcut is [T]) to have 1024 width, 1024 height, at least 1 for each of the
padding entries, and 0 for both spacing entries. Bit depth should be 8, 'A' channel should be 'glyph', nothing inverted,
font descriptor should be Text, textures should be PNG.
5:
In BMFont, select every Unicode character block you want in the font by clicking the checkbox next to the block's name
(like Greek and Coptic, or Box Drawing) so it is fully green if you want everything in it or fully white if you want
nothing in it.
6:
Visualize the font by pressing [V] or selecting it from the top menu. This will look terrible, it's because there's no
smoothing, there will be smoothing added by the distance field generator, so don't worry about it at this point. If the
font fits tightly on one 1024x1024 page, we're done. You can go between pages if there are multiple by pressing the left
and right arrow keys, and the title of the visualization window should say 1/1 if there's only one page. If there's a
lot of extra space on one page, you should increase the font size as in step 3. If there are multiple pages, decrease
the font size (as in step 3) or remove unnecessary characters from the font as in step 5. Once you're satisfied that it
fits as tightly as you can manage, go on to generating.
7:
Generate the font using Save Bitmap Font As (shortcut is [Ctrl-S]), and save the .fnt file where you can find it. The
.png file that accompanies it should be kept for a little while longer; it should not be deleted yet despite how
terrible it probably looks. This PNG should NOT be in the libGDX nightly directory, since we'll be writing a replacement
to that folder and we don't want to overwrite this PNG when we do that.
8:
Now we need to generate a 8x scaled version of the font using mostly the same parameters. You can use a larger scale
factor if your computer can safely manipulate images larger than 8192x8192, or a smaller scale if it can only handle up
to 4096. If you find your computer struggling on a 4096x4096 image... Maybe you should update your hardware, or
better yet, try these steps on a friend's more modern computer, since we won't be needing to deal with the large scales
for long. The resulting image should be fine even on older Android phones, and it's only the intermediate steps that
produce very large images.
9:
Run BMFont, open Font Settings (shortcut is [F]) and select your font's name in the dropdown box if it isn't still
selected. The size should be exactly 8 times the size you used previously, enough to almost completely fill a 8192x8192
texture with all the glyphs you want in the font (in Step 10, some other values will change that mean visualizing won't
be accurate just yet). Match char height should be unselected, do not include kerning pairs should be selected, and
font smoothing and super sampling must be deselected. In most cases (individual fonts may have their own needs), render
from TrueType outline and TrueType hinting should be selected, since these make the outline more accurate for many fonts
without adding grayscale colors from smoothing (which we cannot have, period, for the distance field generator to work).
Outline thickness should probably be 0 unless you have a very good reason to change it (hairline fonts need it higher,
but most fonts should have it firmly at 0; if you use an outline, it should be 8 times the outline used earlier).
10:
In BMFont, change the export settings to have 8192 width, 8192 height, and some variant on the padding entries. The
exact numbers may vary based on even extremely small offsets present in the font file, but in the case of
Inconsolata-LGC-Square2.ttf, these went from 1 all around in step 4 to 8 6 8 6 (going clockwise from the top) when
scaled up, due to the font growing slightly wider relative to its height as the scale went up. The padding may need to
be adjusted after generating to match the positions and order of glyphs in the PNG generated in step 7. Usually, the
numbers should default to 8 all around and only need adjusting if inspection after generating shows a difference between
the earlier PNG and the PNG generated in step 13. No other fields in this settings window should be changed.
11:
Change absolutely no characters in the list of highlighted unicode glyphs. None. This affects the layout of the .png we
are trying to make relative to the positions in the original .fnt.
12:
Visualize again, make sure it fits on 1 page. It may not if the padding needs changing, so if there are multiple pages,
reduce the padding as in step 10 until the first character on each row is the same in the visualization here and the PNG
made in step 7.
13:
Generate a second .fnt and corresponding .png file, with a different name from before. We only care about the PNG this
time. Make sure the PNG is in the same folder as the unzipped GDX nightly. Also, make sure the approximate layout of the
step-7-PNG and step-13-PNG are the same; glyph positions on the grid must be identical. If they aren't, change the
padding in step 10 and try again.
14:
Now it's LibGDX's time to shine. At the command prompt, from the folder holding the unzipped GDX nightly, run this
command, replacing INPUT_FONT_8192x8192.png with the name of the PNG generated in step 13, and OUTPUT_FONT_1024x1024.png
with the name of the PNG generated in step 7:

java -cp gdx.jar;gdx-natives.jar;gdx-backend-lwjgl.jar;gdx-backend-lwjgl-natives.jar;extensions\gdx-tools\gdx-tools.jar com.badlogic.gdx.tools.distancefield.DistanceFieldGenerator --downscale 8 --spread 32 INPUT_FONT_8192x8192.png OUTPUT_FONT_1024x1024.png

You may need to tweak the downscale if you couldn't generate an 8x scaled image, or change the spread if it doesn't look
crisp when you actually test it.
15:
Copy the .fnt from step 7 and the new PNG from step 14 (the placeholder name used here was OUTPUT_FONT_1024x1024.png,
but of course it should be the name of the PNG that was generated along with the .fnt from step 7, since the .fnt will
look for a PNG by that name) into the assets or resources folder of your libGDX project.
16:
From here on out it's mostly down to experimentation with the techniques used in SquidLib to adapt for a different size
of bitmap font, and possibly changing the distance.frag shader supplied with SquidLib to adjust crispness ever-so-
slightly (the difference between 0.0625 and 0.062 is noticeable on small details like the double-dots over many letters
in non-English languages; yes, that's 1.0/2000.0). Good luck!