A hammer-on refers to the technique of sounding a note without actually playing the string (with the right hand). The sound is entirely produced by striking the string with one of the left hand fingers. In the following example, only the D note is picked, and the third finger "hammers-on" firmly to produce the sound of the E note.
The hammer-on is indicated on the music staff by a curved line joining two different notes. In tablature notation the hammer-on is indicated by a curved line and the letter H above it. Remember that the second note (E), is not played by the right hand; the sound is produced entirely by the third finger "hammering-on" to the string. You must be very careful with the timing of the hammer-on. Both the D and E notes are eighth notes and each should have an equal time value when played (regardless of the hammer-on technique).
Here is an exercise to help you develop the use of hammer-ons. It is shown here on the 4th and 3rd strings, but should continue on the 2nd and 1st strings. It should be practiced many times in succession both ascending and descending.
Here is a bass line which makes frequent use of hammer-ons.