In short, Hedge funds, like Melvin Capital, identify companies they believe will perform poorly, borrow stock in that company and sell it, making it public they've done so. When the price drops, they buy low to pay back the loan and profit the difference.
The risk here is they have to be able to repay that loan in the stock that was borrowed, so if the price goes up instead of down they lose money.
In the case of GameStop, a group of amateur investors on the subreddit r/wallstreetbets, noticed how over extended these companies were and began buying stock to force the price up as those loans come due. The longer they hold, the higher it goes.
Now the hedge funds are losing billions and they've moved to shut down trading for pretty much everyone except themselves. Robinhood, an app that claims to democratize participation in the stock market, is owned by Citadel, which owns Melvin Capital, has halted buys of GameStop stock, as well as several others that were targeted by those amateurs. Other such apps, Ameritrade, for example, have followed suit.
Obviously, there are loud cries this is market manipulation and it's illegal. AOC is calling for an investigation and there's a lot of buzz about a class action lawsuit against Robinhood, specifically, but others as well.
One thing that's particularly interesting is this the 2nd time in less than 12 months the elites have turned the game off when they might lose.