HDCP stands for High-bandwidth Digital Content Protection. It is the encryption and handshaking protocol used by DVI and HDMI connections to allow transmission of high definition video content between devices. In the future, this is the protocol that will be used to connect video sources like HD-DVD and BluRay players and set top boxes to your high definition television. Ed Felten of Freedom to Tinker gives an excellent overview of the technology. He describes it in easily-accessible language that doesn't require a Ph.D. in mathematics to understand.
For those who want full details, you can find the full specification and other documents here.