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having spent most of a very rainy sunday outside, it occurred to me that it would be worth discussing this.
DWR stand for 'durable water repellent.' most nylon shells available today have some kind DWR coating that helps make the fabric more resistant to water. all clothing with a waterproof/breathable membrane has the coating. in practical terms, a jacket with functioning DWR will, at least for some period of time, have rain or water bead up and roll off, rather than absorbing the water.
DWR is durable but doesn't last forever. over time, washing a garment will remove some of the DWR. so will chafing/abrasion, like you would get from contact with rocks or from a backpack hip belt and shoulder strap.
The DWR plays an important role in a waterproof/breathable garment's ability to allow moisture to escape. when water hitting the surface of a jacket beads up and rolls off, it keeps the pores of the membrane clear and able to allow smaller water vapor molecules to escape. when the DWR stops working, the outer surface of the shell gets wet - and that can compromise the fabric's ability to allow moisture to escape.
waterproof/breathable fabrics also become less efficient when exposed to dirt, or when they accumulate oils from a person's body through wear (which is inevitable over time, even if you aren't wearing the shell directly against your skin.
happily, there are pretty easy solutions to this. periodically, wash your shell pants or jacket in a machine. most detergents are probably fine; i use nikwax's tech wash because i think it is more gentle and less likely to remove the factory-installed DWR. Usually, washing a garment and drying it (i hang dry all shells with waterproof/breathable membranes) restores much or all of the DWR properties and the ability to let moisture escape through the pores in the waterproof/breathable treatment or membrane.
Much more occasionally, you may want to restore DWR by re-applying the coating. There are products you can spray on or wash in. when in doubt, follow the manufacturer's instructions for doing this. for example, Gore recommends spray-on DWR treatments rather than wash-in. (i prefer the wash-in because it's easier). sometimes, a small amount of heat also helps restore DWR, like a short run through a dryer on a low setting, but some manufacturers frown on using dryers. you could also apply heat with an iron, but that's risky b/c it can damage the fabric.
REI has a more detailed explanation of this: http://www.rei.com/expertadvice/articles/rainwear+dwr.html