What does HBOOT mean?
HBOOT is bootloader. It lives inside NAND's first partition, mtd0 (if partition map is MTD). It is loaded in memory (RAM) when device is switched ON. Its jobs are:


Check the Hardware.
Initialize the Hardware.
Start the Operating System (Either Android or Recovery).


HBOOT can also support doing more than this like flashing ROMs.

Something More: Nandroid backup and restore don't touch HBOOT.