Dynamic range is the camera sensor’s ability to capture detail in very bright and very dark parts of a scene. Cameras (or sensors) with a low dynamic range record dark shadows as a solid black or bright highlights as a featureless white. In the days of film, this was known as a film’s ‘exposure latitude’. […]
When you shoot RAW files there is often a little extra highlight detail in the data than is initially visible, and a good RAW converter will be able to recover this detail to correct any 'blown out' areas. There's no much margin for correction, however – typically you might be able to recover 1EV of additional highlight detail, but rarely more.