A hedge fund is a way to invest some of your money to protect most of your money (as in, hedging your bets).
As an artist, think of it this way... imagine a large new landmark building by a famous architect. You look at the building and think it is sooo mundane, so uninspired. You may be bored by or even hate almost everything about the building, but he or she included one, small, controversial architectural detail that so amazed and impressed you, that it outweighs all the failings in the rest of the project.
Meanwhile, the mainstream, unsophisticated person may love the rest of the building, and hate the little detail, but that detail is so small they probably don't even notice it.
A hedge fund is that little, controversial, risky detail among your investments.
You invest a little money in a high risk/high reward opportunity that goes in the opposite direction of your other investments. Like, when oil prices go up, oil companies make money, but companies that sell gas-guzzling trucks lose money.
So, if you have alot of your money invested in oil, you hedge by investing a little in truck companies. That way, in case oil goes down, the truck stocks would go up, and you would be protected. Except, to be protected enough, you would buy truck company OPTIONS instead of truck company stock. Option prices move ALOT, while stock prices only move a little. It is very risky, because options can lose all of their value quickly, but when an option goes up, it goes up, like, 10 or 100 times more than a stock would. The idea is, the only way you could lose all of your money in the options is if you are making even more money in the oil stock.
That's a simple example; real hedge funds make sophisticated investments in foreign currencies and derivatives and other high risk investments that are known to move in the opposite direction of other investments. A good example is gold; when the dollar loses value, gold moves up in value. If you have alot of investment in U.S. dollars, you buy a small, high risk, high reward investment in gold, as a hedge.
Because of their high-risk nature, and their purpose, hedge funds are meant only to be used by very wealthy people, and usually require very large minimum investments, typically in the millions.
Hedge funds are controversial, because they make huge investments that go in the opposite direction of most other investors. They will often make investments that bet a company will do poorly (aka 'short selling'), while most people are investing in companies that they think will do well.