It combines multiple snapshots at different exposures into a single frame to generate an image (or video) that looks more evenly exposed. The result is a more detailed image in which you will be able to pick out smaller details than is possible in an ordinary shot in very brightly lit areas. https://support.ring.com/hc/en-us/articles/360024512492-Using-the-HDR-High-Dynamic-Range-Toggle-on-Your-Ring-Device.
It seems that it’s normal to have FPS drops when in HDR mode since the device is performing simultaneous process. However, having a choppy video isn’t normal. Video quality depends on your wifi connection/speed, RSSI and some other internet related issues. If everything’s looking good with your connection, then I would suggest to contact tech support.