in a nutshell, HDC lets you come down a hill forwards or backwards, with feet off the pedals, allowing you to concentrate on the steering. It only works in first or reverse. The ecu monitors the speed of each of the wheels individually and then controls the braking to that wheel accordingly. If it detects no speed then the wheel is slipping so it eases the brake off until it regains traction. To get the best idea of what it does, find a multi storey car park, go to the top of the slope, select first, turn on HDC and take your feet off the pedals. You will find hopefully your freelander will crawl slowly to the bottom, and if you have the radio off, you should here the various brake cylinders pinging as the ecu turns them on and off.
Of course, it it's not working properly, you run the risk of rolling down the slope and crashing into whatever is in the way, so maybe keep your foot by the brake just in case.