HO scale (H0 scale in continental Europe) is the most popular model railway scale in the world outside the United Kingdom, where the slightly larger (in scale) OO scale is most common. OO in fact uses HO gauge trackage, but is out of proportion compared to the track.
The name is derived from the German Halb-null ("half-zero"), because its 1:87 scale is approximately half that of O scale. In North America it is sometimes referred to as 1:87.1, or 3.5mm to the foot. O Scale is quarter inch (6.4mm) to the foot.
Modern HO trains run on realistic-looking two-rail track, which is powered by direct current (varying the voltage applied to the rails to change the speed, and polarity to change direction), or by Digital Command Control (sending commands to a decoder in each locomotive). Some trains, most notably by Märklin of Germany, run on alternating current, supplied by a third rail consisting of small bumps on each tie down the centre of the track. In fact, early HO trains used a center third rail, just like Lionel trains used. Some modellers built elaborate trackwork with an outside third rail for power.
HO scale trains first appeared in the United Kingdom in the 1930s, originally as an alternative to OO scale. It proved unsuitable for scale modelling UK trains. However, it became very popular in the North America, where it took off in the late 1950s after interest in model railroads as toys declined and more emphasis began to be placed on realism in response to hobbyist demand. While HO scale is by nature more delicate than O scale, its smaller size allows modelers to fit more details and more scale miles into a comparable area. During the 1940s HO and O were neck and neck, but in the 1950s HO had taken the lead and became the majourity scale.
In the 1960s, as HO cemented its lead over O scale in popularity, even the stalwarts of other scales, including A.C. Gilbert (makers of American Flyer) and Lionel Corporation, began manufacturing HO trains. HO locomotives, rolling stock (cars or carriages), buildings, and scenery are available today from a large number of manufacturers in a variety of price brackets.
See Model Railroad Scales for more information on the various scales and their evolution.