Hydrogenation is a process used to transform liquid vegetable oil into a solid food like margarine. The process is a complicated one with many advantages and risks.
To hydrogenate vegetable oil, the liquid oil is first heated to very high temperatures and a catalyst like nickel is added. Then, hydrogen bubbles are passed through the heated oil. The oil becomes dense when that hydrogen is acquired by fatty acids in the oil.
When fully hydrogenated, the oil becomes a completely solid fat. If the process is stopped before this solid is achieved, the result is partially hydrogenated oil with a semi-solid consistency; this is the ingredient most commonly used in margarine. Whey, water, salt, vitamins, colourings or flavourings may now be added to the partially hydrogenated oil to make the margarine product more desirable for consumers.
Unlike butter, hydrogenated oils contain trans fats: normal fatty acids that have been "transmogrified" during the hydrogenation process. The human body does not naturally recognise these acids and their long-term effect is still unclear, but since your body does not recognise these substances it can't defend itself against them when needed. Due to these risks, many companies such as Kraft have eliminated or greatly reduced the use of hydrogenated oils in their products, and some European countries have even banned them altogether.