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It’s more about the exposure than the contrast. In any given photo you’ll typically have light areas and dark areas. If an area is too bright it can get washed out or blown out, and you lose information in the process. Too blown out and you get pure white, which can’t be recovered. If it’s too dark, obviously you’ll get pure black, and you won’t be able to recover whatever was in the dark area.
With HDR, you’re taking several photos with different exposure speeds. Different speeds will capture different light levels (ie, a slow photo to capture the dark areas, a medium exposure to capture the bulk of the scene and a fast exposure to capture the bright areas without blowing them out. You can, of course, merge more than three photos, but an HDR is typically going to be at least three photos.).
Once you take the photos, you merge them together so you have a photo where everything is at a visible exposure. The contrast will of course change, but that’s more of a side effect.