What's a HUD?
In Second Life, objects can be worn on one of the eight HUD (short for heads-up display) attachment points. HUDs are essential to understand, since every SL Resident eventually comes across them sooner or later.
A HUD typically consists of a control panel with different buttons you can click on to do context-specific stuff. Some HUDs are "passive" and only meant to be looked at, not touched.
While general attachments appear on your avatar's body and other Residents can see them, HUDs are only visible to you and have a fixed viewpoint, similar to how they're used in video games and apps. However, the scripted effects of a HUD, like emitted chat, can be visible to other Residents and objects.
HUDs are an evolution of user interaction in SL: before HUDs, Residents were limited to typing commands in chat or touch dialogs (pop-up windows with choices to click on). These methods are still used — sometimes in tandem with HUDs — but HUDs are often more visually attractive and user-friendly, making them approachable.
Objects specifically designed to be used like that may have "HUD" in their name to tell you where they'll appear, or they may have "(wear me)" in their name.
This video quickly gets you started on the basics:
Yes, HUDs are mighty fine for games in Second Life too. Wanna learn more?
... and share your fave HUDs and tips & tricks for all things HUD-related in the comments!