HEVC (High Efficiency Video Coding, sometimes called H.265) is a new video compression format and is the successor of H.264. It was formalized on the 25th of November 2013 and published as ISO/IEC 23008-2:2013. An open source HEVC decoder and encoder (x265) has been developed and is widely adopted.
Support in Kodi
Kodi v14 (changelog) introduced software decoding support for HEVC. Kodi v15 (changelog) introduced limited hardware decoding support for some devices, such as a few Android-based video decoders, for Linux on Amlogic SoCs and for Windows via DXVA. Kodi v16 (changelog) further improved hardware decoding on Android and Windows and introduced it via VAAPI and VDPAU API on linux. Most HTPCs do not have hardware decoding support for HEVC, so they will need a fairly powerful desktop class CPU in order to playback HEVC videos.