About
"Hat Fortress 2" Is the common name for a meme that is the result of the many changes the online first person shooter Team Fortress 2 has undergone under it's 4 year long run.

Origin
At it's release in November 22, 2007, it was a simple class based game. The game was regularly updated, with certain bigger patches including new content. The first of these big patches was the April 29, 2008 Gold Rush Update which added the games "Item" system. Three new unlockable weapons for the "Medic" class was added where players either obtain them though completing a number of objetives (achievements) or by a lucky "random drop".

These updates continue and be later known as "class updates" which in every big patch, one or more of the 9 classes would get three new weapons.

However, this would change in the May 21, 2009 Sniper vs Spy Update. On the last day before the patch went live, another feaure was revealed, Hats.

These were purely cosmetic and unlike any other things that had been added to TF2 up until this point. They were only obtainable through the random drop, in other words the only way players could get these was to simply play the game and hope for the best. At this point they were a nice addition to the game, and a nice way to brag and show off without actually having to be good at the game.

More and more hats
Hat's were a rarity. Every 4 hours, 17 minutes, and 10 seconds of gameplay, you would have a 1 in 28 chance to get a hat.
In almost every large update ever since the Sniper vs Spy one, more hats would be added. The obsession with hats grew within the TF2 community, and every single player sought to have hats.

Some solved this rarity problem by a thing simply called "idling". The drop system didn't require you to actually play the game for the hat drop timer to go off every 4 hours, you just had to be connected to a server. So by simply starting the game and leaving it on and then go off to do something else, players could increase the chance by getting a hat incredibly. The demand for hats would also become something profitable as Valve started to give out promotional hats for those who purchased speficic games.

The developers of the game are very aware of all these changes and reactions to all the hats in the game and have made several posts about it on their official TF2 blog;

During the page introducing the game for Mac computers, they even jokingly called it:
America's #1 war-themed hat simulator

Some of the later updates would start to include hats (and items) made by player's themselves, increasing the amount of hats included in patches even more. Soon the number of hats would grow beyond 100.

Team Fortress Today

Many players weren't so happy with these new additions, as they questioned if was about playing the game and enjoying it anymore or to simply do nothing else but to collect hats and other unlockables. Whether some liked it or not, hats were here to stay. Another gripe many had with hats was that many of the later ones would go outside of the borders of the games unique art style. Serveral of the hats in the game just simply didn't fit in there with everything else. Some went so far that they didn't think TF2 was a online first person shooter anymore. It was nothing but a hat simulator.
Hat fortress 2.