Normal 8-bit images only have 255 values for red, green, and blue. an hdr image contains unlimited values for each number, but also contains a separate luminance (brightness) value in addition to the colors that represents the actual intensity of light at that point. These values are usually calculated by analysing several exposures of the same scene, taken in the exact same position on a tripod. The software (either photoshop or hdrshop), looks at each pixel of each exposure and uses the difference between exposures to determine the actual brightness at that point. With only 255 bits per color, you can only have 255 levels of brightness held in an image. In real life, the sun is more than 2 million times as bright as "black," and an hdr image can represent this. Nor it's useful because it actually lets you adjust exposure without changing the contrast of the image. You can just slide back and forth between under and over exposed until you find the right middle ground. When you import an hdr file into a 3d program, the brightness values are actually mapped as light sources in a 3D spherical space. Thus, the image actually casts light according to the actual values in the scene. This is very useful for mimicing real-life lighting scenarios, and is indespensable for accurate compositing, at it allows you to completely match a computer generated element into live footage.