D-Lighting is a shadow & highlight enhancement feature first seen on Nikon's Coolpix range of compact cameras and later on the D200. On previous models it was an after-the-fact filter which you could apply to images in playback mode. With the D300 'Active' D-Lighting is a menu setting which is applied to all images if enabled. There are four levels available; Off, Low, Normal and High. Rather than only adjusting the shape of the tone curve (as most similar systems do) setting higher levels appears to apply a third of a stop negative exposure compensation (typically slightly higher shutter speed). Unlike the Sony DRO system Nikon's works best if you meter for shadows (apply some positive exposure compensation) and allow Active D-Lighting to maintain / recover highlight detail.
To demonstrate the difference Active D-Lighting can make we set up our simple 'shadow scene' and shot it at increasing exposure compensation levels with Active D-Lighting Off and also set to High. As you can see the High setting manages to maintain highlight detail with about +1.0 EV compensation, beyond that while it is better than Off even the High setting can't maintain full highlight detail.