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From Odwiki

A hip file is the native scene file of Houdini. See others formats in FileFormats.

A hip file is a binary file which is a structure collapsed as a CPIOArchive. Hip files can be expanded and collapsed using the hexpand and hcollapse commandline utilities. This is very useful for bug-fixing broken scenes. Nodes can be edited or removed quite easily in the expanded form. The resultant scene has to be collapsed again for Houdini top read it. Another useful way of editing scenes is to use the commandline form of Houdini, hscript.

The nested hierarchy of operators you see in Houdini can be thought of as a nested series of directories on disk.