Photomerge vs. HDR

[tybo78]

So I've been wondering about HDR for some time but never tried any. Recently though, I did some photo merging and tone mapping in Gimp and was pleased with the results. My question is whats the difference between photo merge/tone map and true HDR? I know the general principle behind HDR but haven't done any.
Thanks in advance for any feedback!

[sybren]

There are two methods I'm aware of to do HDR:

The first method combines multiple photos into one HDR photo. This usually is a 32-bit floating point image (instead of 8-bit integer like JPEG). You can't display such a photo, but you can do math on it. To make the photo fit in the 8-bit space of your monitor, tonemapping is used to reduce the contrast.

The second method combines multiple photos in a smart way to produce a new photo. This new photo takes pixels from the input photos in such a way that local contrast is enhanced and details are preserved. It can be done manually with Photoshop or The Gimp, or with special tools such as Hugin/Enfuse.

The first method is true HDR, in that a HDR image is created during the process. However, the tone mapping process often results in unrealistic, over-saturated images. The second method tends to produce much more natural results.