A hedge fund is a where a bunch of wealthy people give their money to someone to manage. This gives them more buying power. Instead of 10 people individually investing $10mil, it's 1 entity investing $100mil.
What's happening with Gamestop is these hedgefunds were gambling that the stock price of gamestock was going to drop. Essentially, they "borrowed" a bunch of stock from a broker a lets say $10 per share and sold it. They were hoping that the price would drop to say $5, at which point they would rebuy the stock to give back to the broker, and they would keep the $5 they made. The hedgefunds never actually owned the stock.
A reddit user /u/deepfuckingvalue did a deep dive into Gamestop way back in June/July of last year and gave a bunch of reasons why the stock price of Gamestock should be higher. Reddit bought in, and this user placed a bet on game stop the opposite way of the hedgefunds. He purchased the rights to buy the stock at a certain price at some point in the future. He makes his money when the price goes above the point that he can buy at. Say it's at $5. He thinks it's going to $20, so he places a downpayment to buy at $10 on a certain date. (this is so he doesn't have to front all the money and just buy at $5.) When it gets to $20, he exercises his right to buy at $10, and then sells at $20 doubling his money.
When the price goes up, the hedgefunds are screwed. Instead of rebuying stock they sold, that they never actually owned, for less than they sold it for, they now have to rebuy for higher than they sold for. So instead of selling for $10 and buying for $5 making a $5 profit, they have to buy at $20 and in turn lose $10 per share.
The higher the price climbs, the more these hedgefunds take it in the backside.
All this started in June/July of last year when the price of the stock was $4 per share. Yesterday the price per share hit $483! An insanely unheard of metoeric rise in value. The hedgefunds were going to be on the hook for BILLIONS of losses if they can't figure out how to get the price to drop back down.