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HDR stands for High Dynamic Range. Instead of using 8 bit values per channel, HDR uses 16 or even 32 bit values, to allow for a much greater range of colors, greater than the monitor can display at once. To display these colors, the monitor takes the brightest values that the user is viewing and makes them the brightest color the screen can display, and the darkest values that are on screen and makes them the darkest the screen can display. In this fashion, what's white from one viewpoint will be gray the next, and possibly even black from another. Freeing up the entire range of color on the display at all times results in allowing more detail, such as some stones which would be very similar with a static range but can take the entire range with HDR, allowing for bright highlights and dark shadows.
Valve has introduced HDR with Half-Life 2: Lost Coast and Day of Defeat: Source into the Source engine. Nowadays other Source engine games and mods also support HDR.