Graduated neutral density filter

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A GND filter held up to the horizon. Note the poor contrast in the oversaturated part of the sky not covered by the filter.

A Cokin 2-stop (ND2) graduated ND filter.

A graduated neutral density filter, also known as a graduated ND filter, split neutral density filter, or just a graduated filter, is an optical filter that has a variable light transmission. Typically half of the filter is of neutral density which transitions, either hardly or softly, into the other half which is clear. It is used to bring an overly-bright part of a scene into the dynamic range of film or sensor. For example, it can be used to darken a bright sky so that both the sky and subject can be properly exposed.

Although its importance may have lessened with the advent of the modern digital darkroom, it is still an important tool for professionals because a digital sensor that is "blown out" or "washed out"- i.e. reading maximum values (white)- captures no usable data and cannot be corrected with later processing.

The filter comes in many types, basically can be separated in to two categories.

Hard Edge
Soft Edge

A hard edge is used when there is an abrupt change in brightness. For example a field with a horizon to a bright sky. A soft edge is a wider smoother change from light to dark. This is used when the light and dark portions are not distinctly separated. For example a mountain and sky. A soft edge filter is less noticeable than a hard edge. It also has the benefit of making the sky more intense, darkening the sky the closer on the top. Below is a picture of what a hard edge and soft edge filter would look like.